Angela Merkel is poised to form a government by Christmas after the German Chancellor’s Conservatives (CDU) and the centre-left Social Democrats (SPD) reached a deal.

The breakthrough came at SPD headquarters after 17 hours of tense negotiations. Merkel left without revealing details of the deal which will result in a “grand coalition “ with which both sides say they are happy.

“It has been very intense and sometimes very hard work today but I think we have a result that is good for our country which is the main measure, but we can also say the result has a strong conservative imprint,” said the Secretary General of the Christian Democrat Party Herman Groehe.

The SPD’s involvement still depends on a ballot among their card-carrying members. It is understood the party won concessions on the economy including agreeing to a minimum wage.

“We drove a hard bargain right up to the end and we negotiated successfully as far as we are concerned. We brought ten points from our manifesto to the negotiating table,” Andrea Nahles the Secretary General of the Social Democrats said.

The process to form a government has taken two months since Merkel’s landslide victory in her country’s elections and has prevented Germany’s European partners from pushing ahead with reforms like a banking union.

It will be the second such ‘grand coalition’ in the last decade.