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Merkel prepares for last phase of German government talks, insists on keeping lid on spending

  • German Chancellor Angela Merkel speaks during a union rally of German metalworkers union in Frankfurt, Germany, Monday, Nov. 25, 2013. (AP Photo/Michael Probst)The Associated Press

  • German Chancellor Angela Merkel smiles as she attends a union rally of German metalworkers union in Frankfurt, Germany, Monday, Nov. 25, 2013. (AP Photo/Michael Probst)The Associated Press

  • German Chancellor Angela Merkel speaks during a union rally of German metalworkers union in Frankfurt, Germany, Monday, Nov. 25, 2013. (AP Photo/Michael Probst)The Associated Press

  • German Chancellor Angela Merkel speaks during a union rally of German metalworkers union in Frankfurt, Germany, Monday, Nov. 25, 2013. (AP Photo/Michael Probst)The Associated Press

Chancellor Angela Merkel is insisting that Germany's new government must keep a lid on spending as she prepares for the decisive phase of coalition talks with her traditional center-left rivals.

Merkel's conservative Union bloc and the Social Democrats hope to reach agreement this week on a "grand coalition" of Germany's biggest parties. That's more than two months after the conservatives won elections but fell short of a parliamentary majority.

Many details of the new government's agenda remain unresolved and Merkel's conservatives are adamant they won't accept tax increases to finance spending — which the Social Democrats campaigned for before the elections.

Merkel has pushed austerity elsewhere in Europe during its debt crisis. She insisted at a union conference in Frankfurt on Monday that Germany "must stop running up debt."