German SPD votes to enter 'grand coalition' with Merkel

John Macdougall | AFP | Getty ImagesVolunteers count the votes of SPD members

Germany's Social Democrats (SPD) voted overwhelmingly in favor of joining a "grand coalition" with Chancellor Angela Merkel's conservative Christian Democrats on Saturday, clearing the way for a new government to take office on Tuesday.

The SPD said that 76 percent of its grassroots members who took part in a postal ballot voted in a referendum in favour of joining a right-left coalition with the conservatives.

(Read more: Germany has a new government, what next?)

German policy could boost domestic consumption: ProTom Elliott, international investment strategist at DeVere Group, says the German coalition could produce more "consumption friendly policies" due to the influence of the SPD, helping to boost domestic consumption.

Merkel's Christian Democrats (CDU) and their Bavarian sister party, the Christian Social Union (CSU), won the Sept. 22 election but fell short of a majority. They need a partner and spent much of the last three months negotiating a coalition agreement with the SPD, a distant second in September.

The leaders of the three parties will announce the 15 members of the cabinet on Sunday. The coalition agreement is due to be signed on Monday and Merkel's new government could be sworn into office on Tuesday.

(Read more: Merkel gets a mandate, but market reaction muted)

(Read more: Germany's coalition deal)

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