GERMANY: Chancellor Angela Merkel has vowed to begin a "second stage" of reforms after three weekend state elections strengthened support for Berlin's grand coalition government.
But the competing reform proposals of Dr Merkel's Christian Democrats (CDU) and the Social Democrats (SPD) mean this second stage will see an end to their relatively harmonious six-month cohabitation.
The weekend elections saw the CDU retain power in the southern state of Baden-Württemburg, which it has ruled for over half a century, and the SPD keep the reins in the western state of Rhineland Palatinate.
Voters in Saxony-Anhalt in the east appear to have voted for a state government similar to the federal grand coalition in Berlin.
"The elections proved a good result for the grand coalition," said Dr Merkel yesterday. "I see in the results confirmation of our work until now and a boost for the work in the future."
The coalition parties spent the last six months avoiding issues on which there is potential disagreement. But with the next state elections due in September, they now have a clear run to agree compromises on divergent policies.
The most urgent problem facing the government is the introduction of policies to reduce unemployment, still at 11 per cent. The CDU and SPD hope to reach agreement by June on new regulations, including a possible minimum wage, as well as state subsidies for low-paid work.
The CDU would also like to further loosen laws regarding the hiring and firing of employees, but face SPD opposition.
New proposals are planned on ways to use the €100 billion annual social budget more effectively to try and increase Germany's low birth rate.
And, after years of debate, the government plans a reform of the postwar federal structure to reduce the number of laws that require the ratification of the 16 states, speeding up Berlin's ability to legislate for change.
The most controversial project ahead is reform of Germany's healthcare system, which is rapidly running out of money.
Millions of Germans pay about 13 per cent of their income into the public healthcare fund, with a matching payment from employers.
From this fund of about €140 billion annually, insurers pay the medical bills of contributors and their families. But this system has come under growing pressure in recent years from the rising cost of medical treatment and the departure of healthier, more affluent contributors to private insurance companies.
The CDU wants to decouple healthcare contributions from labour costs by introducing a new across-the-board premium, while the SPD favours an income-dependent payment.
Meanwhile, the weekend elections have increased pressure on Guido Westerwelle, leader of the liberal Free Democrats (FDP).
The loss of power in two of the three weekend elections will only increase the feeling within the party that Mr Westerwelle has not yet grown into his new role as leader of the opposition.