The leaders of Germany's government-in-waiting agreed on Monday night to make spending cuts worth at least €35bn by 2007 in order to bring the budget deficit back in line with the European Union's fiscal rules.

Speaking after nearly five hours of coalition talks in Berlin, Franz Müntefering, chairman of the Social Democrats, said his party had agreed with its coalition ally the Christian Democrats (CDU) that “€35bn would be missing from the budget in 2007”, adding that this would be the grand coalition's savings target. Additional, smaller-scale savings in 2006 would also be necessary, he said, without giving details.