BERLIN: The conservatives of Germany`s designated chancellor Friedrich Merz and the centre-left Social Democrats formally signed their coalition contract on Monday, on the eve of launching their new government.

Merz, 69, is on Tuesday (today) set to be sworn in as the new leader of Europe`s biggest economy, ending half a year of political paralysis in Berlin.

Merz vowed on Monday to move swiftly to reform Europe`s largest economy. He has also vowed to curb irregular migration and halt the rise of the anti-immigration Alternative for Germany (AfD) party, which took second place in February`s snap general election.

`We live in times of profound change, of profound upheaval ...

and of great uncertainty, and that is why we know that it is our historic obligation to lead this coalition to success,` he said.

The AfD was on Friday designated a `right-wing extremist` party byGermany`s domestic intelligence service a move that has stoked a fresh row with the Trump administration, and against which the AfD launched legal action on Monday.

US Vice President JD Vance described the AfD which like Trump has campaigned against immigration as `the most popular party in Germany`. Secretary of State Marco Rubio called the German intelligence agency`s move `tyranny in disguise`.

Since February`s election the AfD has been running neck-andneck with the CDU/CSU in opinion polls, and occasionally leading.

Merz, who boasts a strong business background buthas no experience in a government leadership post, at Monday`s signing ceremony pledged `strong, well-planned and dependable governance`.

The two parties aim to revive growth in Germany just as a global trade war sparked by US President Donald Trump`s sweeping import tariffs threatens another recession year, as well as to ramp up defence spending amid strains in the transatlantic Nato alliance. SPD co-chief Lars Klingbeil said the new government must help shape the new world order, or risk being `shaped by it`.

Earlier on Monday the SPD unveiled its cabinet picks, a mix of fresh and well-known faces. TheSPD had already said last week Klingbeil, 47, would take on the finance ministry. Defence Minister Boris Pistorius, 65, is the only minister who will keep his job in the new coalition after the SPD scored its worst ever result in the Feb 23 national election.

Pistorius, defence minister since Jan 2023, is popularfor his direct style and firm stance on national security. He has said Germany should be ready to face a war by 2029 due to threats from Russia a bold statement in a country scarred by its own military aggression in the last century.

The SPD also nominated ex-Bundestag president Baerbel Bas, 57, as labour minister, former commissioner for eastern Germany Carsten Schneider, 49, to lead a new ministry for environment and climate protection, and former state secretary for integration Reem Alabali-Radovan, 35, as development minister.

`As a consequence of the poor results in the federal election, we jointly announced a renewal in both personnel and policy direction. With our government team, we as the party leadership are now taking the next step,` Klingbeil, coleader Saskia Esken and General Secretary Matthias Miersch said in a statement.-Agencies