German coalition agreement signed

Mrs Merkel's coalition will have a huge majority in the Bundestag

Germany's three main political parties have formally signed the agreement to set up a "grand coalition".

The deal paves the way for conservative Christian Democrat (CDU) leader Angela Merkel to become Germany's first woman chancellor next Tuesday.

She signed the deal along with her Christian Social Union (CSU) ally Edmund Stoiber and Social Democrat (SPD) leader Matthias Platzeck.

The coalition agreement was reached on Monday after weeks of bargaining.

NEW BUNDESTAG 1. Christian Democrats/Christian Social Union (CDU/CSU): 226 2. Social Democrats (SPD): 222 3. Free Democrats (FDP): 61 4. Left Party: 54 5. Greens: 51

The "grand coalition" is an unusual move for Germany, prompted by an inconclusive 18 September election.

The BBC's Ray Furlong says there has been strong criticism of the coalition agreement from business leaders, trades unions and others.

The 143-page agreement envisages tax increases and spending cuts designed to create jobs, cut the budget deficit and galvanise the sluggish economy.