German Chancellor Angela Merkel opened what promised to be marathon coalition talks, hoping to bring three opposing political camps into a stable government despite signs there would be less money to paper over differences.
Merkel said she was optimistic as she entered talks between her conservative bloc, the pro-business Free Democrats (FDP) and the Greens, despite an assessment by her own party that the next government would have less fiscal room than expected. The outcome of the talks is keenly awaited both at home and across Europe, with many fretting that the European Union could be rudderless with the bloc's longest-serving leader too busy to grapple with crucial issues like euro zone governance reform.
Highlighting the challenge, a report by Merkel's Christian Democrats (CDU) found that there would be only €30 billion free for new projects over the next four years if parties stuck to their commitment to taking on no new debts.
The shortfall will make all the more difficult the tricky three-way pact, dubbed a "Jamaica" coalition because the three parties' colours - black, yellow and green - match those of the Jamaican flag, which is untried at national level.
Higher EU contributions as a result of Brexit and lower central bank profits might reduce spending room by some 15 billion euros, according to calculations seen by Reuters, an obstacle to the FDP's demands for tax cuts or the Greens' hope for environmental and infrastructure spending.
The talks between Merkel's conservative bloc, the pro-business Free Democrats (FDP) and the Greens are styled as "exploratory", but negotiators aim to get down to details of tax and budget policy in their first full meeting together.
"There will be many differences," she said on her arrival at the Berlin talks, adding: "There is readiness on my side to think about this creatively."
Party delegations each made five-minute presentations before breaking ahead of further discussions due on Tuesday.
FDP chief Christian Lindner had earlier said that no matter how good the "atmosphere and seriousness" the parties were far apart on 85 percent of the material to be discussed. After, FDP secretary-general Nicola Beer said she continued to believe there was a "50:50" chance of a Jamaica coalition resulting.
Merkel, weakened by a surging far-right in last month's national election, needs to make the awkward alliance fly as her previous "grand coalition" partners - the centre-left Social Democrats (SPD) - say they want to rebuild in opposition after their worst election result in more than half a century.