BERLIN - Germany's biggest political parties reached a deal Friday to form a coalition government, sealing an accord that would make Angela Merkel the nation's first woman chancellor. Merkel's primary task will be reviving Germany's economy while taming its huge budget deficit. The deal still needs to be endorsed by her Christian Democratic Union, its Bavaria-only Christian Social Union sister party and the center-left Social Democrats of outgoing Chancellor Gerhard Schroeder.
The parties will convene Monday to vote.
Approval by the parties would allow parliament to elect Merkel chancellor on Nov. 22.
"We want to make more of Germany and we, the two big parties, want with these policies to win back people's trust in the ability of politicians ... and show that we can do something for our country," Merkel said, visibly relieved and smiling.
The two sides were forced into talks on a so-called "grand coalition" - only the second in post-World War II Germany - after the country's Sept. 18 election gave neither a majority to govern with their preferred smaller partners.
"It is an ideal coalition treaty," Social Democratic lawmaker Wolfgang Thierse said.
The deal emerged after the parties reached a breakthrough Thursday on raising value-added tax from 19 percent from 16 percent in 2007 to shore up government finances - a victory for the conservatives.
On Friday, the conservatives fulfilled the Social Democrats' demand for a higher income tax for top earners, conservative Juergen Ruetters said. He did not give details, but the Social Democrats had called for a new rate of 45 percent rather than the current top rate of 42 percent.
Another conservative, Peter Mueller, said the outgoing government's four-year-old deal with industry to close down all Germany's nuclear plants by about 2021 would stand. Conservatives had wanted safe plants to stay open longer, but Mueller said "the existing rules will remain."