The proposals thrashed out between chancellor Angela Merkel’s conservative party the Christian Democrats and the centre-left Social Democrats, seen by Reuters, also detailed extra spending on home-building, education and research. 

Merkel struck a deal with the Social Democrats on Friday to open coalition talks after months of uncertainty about her political future.

She had until Friday been unsuccessful in forming a new government since the vote in September.

She told a employers’ conference in November that budget consolidation and growth-friendly investment would be key to the coalition talks.

At the end of the last year, the German economic growth “probably” slowed but is expected to continue to be robust in 2018, the Economy Ministry said in a monthly report.

The ministry said: “The German Economy is experiencing a strong upturn.

“At the end of 2017 the strong economic dynamics probably weakened a bit.”

Data published on Thursday showed the economy grew by 2.2% last year, the strongest rate since 2011.

Merkel pledged ahead of the election to cut income tax and ensure full employment in Germany by 2025.

The two parties have also agreed to cap at 1,000 a month the number of people who will be allowed to join their family living as refugees in Germany.