Germany's second biggest party, the Social Democrats (SPD), on Sunday finally gave the all-clear to renew their partnership with Merkel's conservatives, ending a political impasse that had plagued the country since September's inconclusive election.
“Almost six months after the election, the people expect something to happen now,” Merkel said in a brief statement.
“We see that … Europe faces challenges and that a strong voice from Germany, along with that of France and other member states, is necessary,” she said, pointing to a litany of issues ranging from world trade to the war in Syria. All that “requires us to begin work quickly in the government”, said the veteran leader.
European partners had been anxiously watching as the leader of the EU's biggest economy struggled to find partners to govern with since September.
Both Merkel's conservatives and the centre-left SPD had taken a hammering at the ballot box as many Germans frustrated about the arrival of more than a million asylum seekers in Germany since 2015 voted for the far-right Alternative for Germany (AfD).
The AfD, taking aim at the two mainstream parties' decision to renew their partnership, predicted that “the bill will come at the latest in 2021”, when Germans are again due to go to the polls.
The far-right party, which garnered nearly 13 percent in the September election, also vowed to go after Merkel's CDU over its “continuation of the immigration policy without imposing a limit”.
The presence of the AfD has shaken up the Bundestag, as the anti-immigration group's lawmakers challenge post-war Germany's culture of remembrance of the Nazi era and fuel heated debates on national identity.
Wary of ceding further ground to the Islamophobic protest party, Merkel's conservatives and the SPD have recognised that “more of the same” will not suffice.
They have also agreed to review their cooperation in two years.
The joyless partnership was evident in the sombre faces of leading SPD members Sunday when they announced that their card-carrying members had signed off on their plan to again join Merkel in government.
The Frankfurter Allgemeine Zeitung daily questioned how long the pact would last. “This government has a lengthy to-do list but lacks imagination – that's the public's perception,” it noted.
For now, Merkel is hanging on and is due to be re-elected as chancellor by parliament on March 14 as President Frank-Walter Steinmeier, according to procedure, on Monday nominated her for the post.
Merkel, who has governed for 12 years, is heading into her fourth term weakened, with her party baying for renewal.
Her conservatives are also smarting after losing control of the finance ministry to the Social Democrats as part of concessions to woo the centre-left back.
To tamp down the criticism, she has had to name one of her most outspoken critics, Jens Spahn, to her cabinet.
Seen as the flag-bearer for the right wing of the CDU, outgoing deputy finance minister Spahn has made a name for himself slamming Merkel's centrist policies, particularly on immigration.
Fiercely opposed to her open-door refugee policy, Spahn has advocated a sharp conservative shift to coax back voters from the AfD.