(Bloomberg) -- Germany's Social Democrats laid out a list of demands to remain in Chancellor Angela Merkel's government, but stopped short of threatening an immediate exit.
SPD leaders said they want a “massive” increase in infrastructure spending, a higher minimum wage and more aggressive measures to tackle climate change. The demands were set out by the party's newly-elected leaders on Thursday and will be put to a vote at a party convention in Berlin beginning Friday.
Bunds extended losses after the party's call for large-scale spending increases, with the 10-year yields climbing 2bps.
“We have always said that quitting the coalition is not an end in itself,” Norbert Walter-Borjans, who was elected co-chief of the party last weekend, told reporters in Berlin.
“But nobody can expect a decision tomorrow to remain in a coalition about which there are many open questions and questions that need to be resolved,” he added. “It's about content and not about the question of yes or no.”
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Despite some back-peddling by the SPD, its negotiations with Merkel's bloc won't be easy. Reopening the debate over a climate package that took months to secure will find little support from the CDU and its Bavarian sister party, the CSU. Equally, an increased minimum wage -- which the SPD wants set at 12 euros ($13) an hour -- could become a major bone of contention.
The future of Merkel's government was thrown into doubt when Walter-Borjans and his running mate Saskia Esken won an SPD leadership contest against a tandem led by coalition loyalist Olaf Scholz, Merkel's finance minister and vice chancellor.
While the willingness to engage with Merkel's bloc offers the government a lifeline, the SPD remains a reluctant ally. But ending the coalition could lead to a snap election, a risky bet for a party whose support has slumped to about 15% in recent polls, roughly level with the far-right AfD.
--With assistance from Iain Rogers.
To contact the reporter on this story: Birgit Jennen in Berlin at bjennen1@bloomberg.net
To contact the editors responsible for this story: Ben Sills at bsills@bloomberg.net, Raymond Colitt, Chris Reiter
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