STUTTGART • German Chancellor Angela Merkel's Christian Democrats (CDU) and the Greens have signed a deal to form a ruling coalition in the wealthy state of Baden-Wuerttemberg, a union that could be a model for the national government after a 2017 election.

Speculation about such a team forming at the federal level is likely to rise, given that the Social Democrats (SPD) - currently junior partner in Dr Merkel's national coalition - have slipped in polls, while surging support for the far-right Alternative for Germany (AfD) may make it tougher for mainstream parties to form coalitions.

The Baden-Wuerttemberg deal clinched on Monday makes Dr Merkel's CDU the junior partner - an embarrassing situation, given that the western state, where carmakers Daimler and Porsche are based, was for decades a CDU bastion until a Green-led coalition with the SPD came to power in 2011 after Japan's Fukushima nuclear disaster.

The weakness of the SPD means a CDU-Greens hook-up might end up being mathematically possible at the national level. In addition, the current conservative-SPD federal alliance is traditionally one of last resort, and none of the established parties wants to work with the rising anti-immigrant AfD.

Another western state - Hesse, the home of Germany's financial capital Frankfurt - has a CDU-led coalition with the Greens and senior figures there say it could work in Berlin.

REUTERS