'A lot to do' in negotiations on German coalition, SPD co-leader says

German political leaders still have "a lot to do" to reach an agreement on a governing coalition in Berlin, the co-chief of the centre-left Social Democratic Party (SPD) said on Wednesday.

Ahead of a further round of negotiations in the German capital, Saskia Esken said she is "convinced" that talks will extend into next week, as "there is still a lot to do."

More than a month after the conservative CDU/CSU bloc - made up of Friedrich Merz's Christian Democrats and the Bavaria-only Christian Social Union - won parliamentary elections, negotiations are ongoing over a coalition with the SPD.

Discussions are continuing on Wednesday in a group of 19 top representatives from both sides, including the country's presumptive next chancellor Merz, CSU boss Markus Söder and Lars Klingbeil, Esken's partner as SPD co-leader.

The principal sticking points remain migration policy and cuts to welfare spending.

Esken said the two camps are made up of "very, very different parties," but that they "feel a great responsibility" to come together to form a government.

"This is truly encouraging, not for us, but for the country and its people," she added.

Senior CSU lawmaker Alexander Dobrindt said he is "seeing movement" from the SPD on budgetary cuts, but that issues would need to be worked through thoroughly.

"We do not want to allow any unresolved dissent to arise that could cause difficulties later," he said.

The delay in reaching a coalition has caused unease among German business associations, who have called on political leaders in Berlin to place greater emphasis on companies' needs in the negotiations.

Germany is in the grip of a severe economic crisis, according to an urgent appeal issued on Wednesday by a collective of about 100 trade groups.

"However, the participants in the coalition negotiations seem to be unaffected by these developments," the statement reads. "Their interim results so far are inadequate and fail to address the worsening situation in companies and businesses."

"What has been presented so far ignores the growing economic challenges in many areas," it adds.

The statement is signed by several organizations, including the Confederation of German Employers' Associations, the Federation of German Industries and the Association of German Chambers of Industry and Commerce.

The groups are demanding reforms to social security, with lower contributions for employers, as well as the reduction of bureaucracy and lower energy prices.