Merkel under fire from own ranks over German coalition deal

If approved, the agreement would give control of the foreign ministry, finance ministry, and the labor and social ministry to the party, which is led by former European Parliament President Martin Schulz.

German Chancellor Angela Merkel's conservatives and the Social Democrats (SPD) agreed on Wednesday that they wanted to renew their 2013-2017 ruling "grand coalition" - but the fate of Europe's largest economy is now in the hands of SPD members.

The coalition breakthrough will come as a relief to Germany's European Union partners as the bloc faces tough negotiations on migration and Brexit.

But the latest deal means that a return to the the so-called "grand coalition" between the CDU and SPD, which has been in power for the last 12 years, appears to be on the cards.

Germany has been stuck in political limbo since September's inconclusive general election saw mainstream parties bleed support to the far-right AfD, which tapped into anger over Merkel's liberal refugee policy.

French Finance Minister Bruno Le Maire said the coalition agreement was "very positive" and opened the way for convergence with France on reform of the euro zone, something that the SPD had championed.

Indeed, should Nahles convince a majority of the SPD rank-and-file to back the coalition deal, it could help to set her on the road to becoming the party's chancellor-candidate at the next national election in 2021.

Christian von Stetten, a lawmaker from Merkel's own Christian Democrats (CDU), told Reuters the allocation of cabinet posts, and the finance ministry in particular, had been "a political mistake". Observers expect the referendum to be tight, with the SPD's left and youth wings fiercely opposed to another four years governing in Merkel's shadow.

The outcome of the yes-or-no referendum is expected on March 4.

It's been over four months since its latest elections, and Germany finally has a government again.