In a significant move, the former coalition partners SPD, Greens, and FDP have reached an agreement to implement tax relief measures and increase child benefits in Germany.

This decision comes after the collapse of the so-called 'traffic light' coalition, which had previously struggled to find common ground.

The agreement includes reducing the impact of 'cold progression'—a phenomenon where inflation-adjusted income increases lead to higher tax rates—and raising the child benefit and tax-free allowance.

The Bundestag and Bundesrat must still approve these measures, with the Union's support being crucial for the latter.

This compromise, while seen as a necessary step, has been criticized for merely preventing additional tax burdens rather than offering substantial relief.

The move is seen as a last-ditch effort by the former coalition to deliver on promises before the upcoming elections, despite previous tensions and disagreements.