The leader of the centre-right Christian Democratic Union (CDU) party is expected to start coalition talks with the Social Democrats (SPD) after attempts of a three-way alliance with the liberals and Greens did not work out.

Merkel, whose party won the majority of September’s votes, also said at an employers’ conference in Berlin on Wednesday that Germany would need to the “non-wage” cost of employing someone under 40% mark.

Non-wage costs include social security and insurance contributions, labour taxes and other employer costs such as sick leave and family allowances.

Leading up to the election, Merkel pledged full employment and tax cuts by 2025.

Following the German general election in September, commentators suggested the role of finance minister could be key in coalition talks as Wolfgang Schäuble, of the CDU, stepped down from the role to become the president of the German parliament.

Schäuble has warned of another financial crisis and said the financial world was in danger of “encouraging new bubbles to form”, as a result of money pumped into markets by central banks.