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Merkel's coalition agrees social-welfare reforms

German Chancellor Angela Merkel's centre-right coalition government has reached an agreement over contentious social-welfare policies. The coalition is seeking to impress voters ahead of a looming parliamentary election.

Talks between the Christian Democrat (CDU) chancellor and the leaders of her coalition partners, the Christian Social Union (CSU) and the pro-business Free Democratic Party (FDP), stretched into the early hours of Monday morning, but the almost eight-hour debate proved productive.

Coalition sources announced that all three parties had agreed on several crucial reforms following months of dispute over domestic policies.

The FDP, won its demand to abolish a 10-euro fee which is payable quarterly by German patients for visits to the doctor. In return, Merkel's Christian Democratic Union (CDU) and sister party, the CSU won reluctant FDP support for a monthly allowance for parents who care at home for small children.

The leaders also agreed on fresh funds for transport and a general tax levy in order to boost pensions for the poor.

Simmering discord

Since taking power in 2009 the three-party government has famously been plagued by infighting. But with the election just 10 months away all three leaders are under pressure to bolster support.

Philipp Rösler, leader of the FDP, is particularly desperate to woo voters following a slide in popular support. Recent opinion polls have shown Merkel's junior coalition partner failing to clear the five percent threshold needed for entering parliament.

According to an opinion poll published in Germany's Bild am Sonntag newspaper on Sunday, Merkel's conservatives remain the most popular in German politics. Ahead of the September elections, the CDU garnered 39 percent support. The main opposition Social Democrats (SPD) were second in line and are the favorite future coalition partners. The Greens were on 13 percent, while the FDP were on just four percent.

Following the policy announcement on Monday, the SPD vowed to launch a legal challenge against the child benefit plan. The opposition party has taken a more aggressive political stance since choosing former Finance Minister Peer Steinbrück to run against Merkel in next year's vote.

ccp/mr (dpa, dapd, Reuters)