CHANCELLOR Angela Merkel has expressed confidence her conservative Union bloc would be able to find enough common ground with the centre-left Social Democrats to move toward formal coalition talks.

Heading in to final-day negotiations, Merkel told reporters in Berlin “large obstacles in the path” remained but she intended to push for new compromises.

“The people expect us to find solutions,” she said.

Following a dismal result in Germany’s September 24 election, the Social Democrats vowed they would not extend their “grand coalition” of Germany’s biggest parties with Merkel, but reconsidered after her attempts to form a coalition with two smaller parties collapsed.

Closed-door talks this week have centred on whether the parties can find the basis to open formal negotiations on a coalition agreement to form a new government.

Should the Social Democrats and Merkel’s Christian Democratic Union and Bavarian-only Christian Social Union not be able to form a coalition, the only other paths ahead would be a Merkel-led minority government or fresh elections.

Social Democratic leader Martin Schulz said they had already made progress and found common ground on “many points”.

However, Schulz, a former president of the European Parliament, said a new government needed to “strengthen Europe”.