SPD begins coalition talks but criticizes Merz's style

Germany's Social Democrats (SPD) have agreed to begin coalition talks with Friedrich Merz's conservatives. However, they emphasized that their support is not guaranteed and criticized Merz's negotiating approach. This follows the SPD's significant defeat in the recent election. The SPD elected Lars Klingbeil as their new parliamentary leader after the collapse of the previous coalition. Investors are closely monitoring the SPD's demands for joining the government, particularly regarding a new defense fund and changes to borrowing limits. Merz's recent election win was modest, leaving him with a potentially challenging parliament. He has ruled out quick changes to the debt brake and faces difficulties in securing support for a defense fund. Public opinion shows a majority favoring adjustments to the debt brake.