| GEO World|
| Chancellor Merkel 'seals' German coalition|
| Updated at: 1132 PST, Saturday, October 24, 2009|
BERLIN: Angela Merkel, the German Chancellor, has sealed a coalition deal with the Free Democrats party following last month's election, officials have said.
The deal was announced after marathon talks that stretched into Saturday morning.
"The coalition agreement has been reached," Ronald Pofalla, the general secretary of Merkel's Christian Democrats (CDU), said.
The new centre-right government is due to take office next week. Despite a soaring budget deficit, the common programme adopted by the coalition parties during the late-night talks was reported to include major tax cuts.
Horst Seehofer, the head of the the CDU's Bavarian sister party, the Christian Social Union, said the government would cut income taxes by $36bn (24 billion euros) in 2011-2013 to spur growth.
The deal was a compromise from the higher figure sought by the FDP.
"The financial issues at the end are always the most difficult and most exciting and you have to do that great care," Seehofer said, explaining why the talks stretched until the middle of the night.