An end is near in the German political crisis that has been raging since the election in November led to no clear majority. Chancellor Merkel, the figure present in German politics for over a decade, looks set to secure another term at the helm of Europe’s largest economy, after ‘grand coalition’ talks with major rival the SDP seemed to yield a compromise. The SDP, led by Martin Schultz and still smarting from a historically poor electoral performance and has previously been in a coalition with Merkel’s Christian Democrats, will take two key ministries, finance and foreign, in exchange for supporting Merkel as Chancellor.

This deal must be approved by SDP members in a ballot, and it is sure to raise controversy over the direction of the party, which only just cleared the 20 percent mark in the recent election. Social democratic parties have been suffering in elections across Europe, as far right and populist parties continue to eat into their vote share. The SDP, once the dominant force in German politics, risks slipping into irrelevancy, as both they and the CDU attempt to fight off the extreme Alternative for Germany (AFD), which captured 12 percent of the vote.

The question of whether AFD, who are decidedly antiimmigration and sceptical of further European expansion, can pose a real electoral threat in a country that struggles to this day with the legacy of it’s bloody past remains to be seen. However, the CDU and SPD risk amplifying their voice with this coalition deal. As the largest remaining party not in government, the AFD will serve as the official opposition, giving them a position of real influence in German politics, rather than their current role of the insurgent populist party.

The EU will be relieved to see that an agreement has been reached securing Merkel’s position. Germany is the EU’s largest and arguably healthiest economy and contains a generally pro-EU population. Berlin, together with Paris, sets the tone for the European Commission, and without a functioning government, the lack of German influence panicked some within the EU. As the European Union continues to struggle with rising populism and scepticism in its member states, the return of an established, European friendly leader will calm some nerves in Brussels.

Brexit continues to dominate European politics, and whilst it was not an electoral issue in Germany, Merkel will be expected to take the lead in the upcoming second stage of negotiations. German opinion leans towards preserving the sanctity of the Single Market and it’s four freedoms, which would have been a basic free trade deal with the UK without any special concessions. However, the German and British economies are interlinked, and the risk to business on either side of the channel is considerable.

It is likely the SDP will approve the coalition deal, given their party is low on funds and unwilling to face a snap election in which they would struggle. If this proves to be so, Merkel will have survived the toughest test of her political career. The ever-present of German politics looks set to continue on, albeit weaker and more vulnerable.