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BERLIN-Germany's Social Democratic Party said Sunday its members have voted in favour of joining a coalition with Angela Merkel's conservative bloc, clearing the last major hurdle to the formation of a new government and a fourth term for the veteran German chancellor. But it is surely the beginning of the end.

Merkel's conservatives - her Christian Democrats (CDU) and their Bavarian Christian Social Union (CSU) allies - and the SPD are both still bruised after suffering from the rise of the far-right Alternative for Germany (AfD) in last year's election.

Merkel's party, the Christian Social Union, had captured the most votes in national elections five months ago but hadn't been able to reach a coalition.

"We now have clarity: the SPD will join the next German government", he added.

German business greeted with relief the news that the country would get a government after its longest-ever post-election interregnum.

Macron hailed the development as "good news for Europe".

"I congratulate the SPD on this clear result and look forward to further cooperation for the good of our country", Merkel said in a statement on Twitter.

Parliament is expected to meet next week to elect Merkel as chancellor, confirming her position as one of Europe's dominant politicians.

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Differences in migration policy contributed to the collapse of weeks-long coalition talks a year ago among Merkel's CDU, its Bavarian sister party, the pro-business Free Democratic Party (FDP), and the Green party, following federal elections at the end of September.

The two blocs reached a 179-page coalition agreement document in early February, detailing the main issues such as policy orientations, spending and which party will name ministers in the new government.

Merkel also wants to serve a full, fourth term, rather than yield before her time is up. French President Macron's ambitions to reform the EU can not be achieved without the efforts from Germany and a government in Berlin highlighting European policies.

Scholz had said on Saturday turnout in the poll had been "very, very high" after an intense internal campaign that pitted the party's pro-coalition leadership against its more radical youth wing, which campaigned for "No".

Kevin Kuehnert, head of the SPD's youth wing, said he was disappointed but that the "Jusos" (youth wing) would keep up their criticism, signaling that, after bringing in a flood of new members, they would be a thorn in the leadership's side. Months of political wrangling (don't forget Mrs Merkel tried - and failed - to form a coalition with the Green and FDP parties) have done little to inspire confidence in Germany's established parties. "The SPD needs to be more like it has been in recent weeks and less like it has been in recent years - the Jusos will ensure this".

The Social Democrats plan to unveil their cabinet nominations on March 12.

"In 2021 at the latest, they'll pay the price", the party tweeted.

Under the new coalition deal, Germany will spend EUR46 billion on increased pensions, housing, scaling up broadband internet in the countryside and education, all policies with the stamp of the SPD on them.