The likelihood of Germany's two largest political parties forming a grand coalition increased last night, after leaders of the opposition Christian Democrats and ruling Social Democrats both highlighted the need for "large scale reforms" to take centre stage in such a government.

After three hours of talks in Berlin, Gerhard Schröder, the German chancellor, said he was "sure agreement would be reached" on a CDU-SPD alliance, while Angela Merkel, the CDU leader, said she was "positively surprised that the talks were held in such a constructive atmosphere".