At odds on health and labour, German parties to continue coalition talks Monday

BERLIN:  German Chancellor Angela Merkel's conservatives and the Social Democrats (SPD) failed to conclude coalition negotiations in time to meet a Sunday deadline but have made progress and will reconvene on Monday, a senior SPD member said.
More than four months after a national election, Europe's largest economy and pre-eminent power-broker is in political paralysis, causing concern among investors and partner countries that policymaking on issues such as Britain's looming departure from the European Union and euro zone reform may be held up.
The conservatives and SPD had hoped to agree on Sunday to renew the "grand coalition" that has governed Germany since 2013, but disputes over healthcare and labour policy remain.
"We had a very constructive day today and we reached a lot of agreements," said SPD General Secretary Lars Klingbeil, pointing to deals on rents and real estate, digitalisation and culture.
"But we've just determined in the top group of negotiators that we still have issues on which we differ and about which we will talk, and about which we want to talk in detail and in a focused way," he said, adding that the parties had therefore agreed to continue talks from 0900 GMT on Monday.
Asked on ARD television if the negotiations could still fail, senior conservative Reiner Haseloff said: "I don't think so. I hope not. I can't think of any topic that is insurmountable."
Merkel, in office for 12 years, had said earlier on Sunday that her conservatives faced tough negotiations with the SPD, adding: "We did good groundwork yesterday but there are still important issues that need to be resolved."

PROGRESS

The parties agreed on Sunday to invest more than 2 billion euros in social housing by 2021, to spend up to 12 billion euros on expanding broadband and to channel 33 billion euros to municipalities for various projects including childcare.
They have ticked off migration, energy and agriculture in recent days too but the most contentious issues -- labour rules and healthcare -- have yet to be resolved.
As he arrived for talks, SPD leader Martin Schulz said the sides had edged closer on many issues but were still clashing over an SPD demand to abolish fixed-term employment contracts and its call to replace Germany's dual public-private healthcare system with one insurance system for all.
Healthcare and labour policy are crucial for the SPD as it tries to convince its 443,000 members -- many of whom oppose forming another awkward partnership with Merkel after their party suffered its worst postwar result in September's election.
"I think agreements are possible but they still haven't been reached," Schulz said. "Ultimately it's necessary to take the time you need to create a stable foundation for a stable government."
The conservatives have rejected SPD calls for sweeping reform of health insurance and talks are now expected to focus on improving public healthcare, such as by changing billing rules for doctors, who earn more by treating private patients.
In labour market policy, Merkel's bloc does not want to ban fixed-term contracts, but has offered to prevent the repeated renewal of such contracts as a compromise.
SPD negotiator Manuela Schwesig, aware of the need to push through distinctive SPD policies to sell the deal to the party at large, said: "We've promised our members that we'll negotiate until the other side squeals, and we'll do that."

(additional reporting by Thorsten Severin; Writing by Michelle Martin; Editing by Catherine Evans)