Merkel
© Global Look Press/Monika Skolimowska
German Chancellor Angela Merkel
German Chancellor Angela Merkel's 'Grand Coalition' is under threat from within, as the Social Democrats (SDP) elect new, leftist leaders. Their focus on social justice puts the SDP at odds with Merkel's center-right CDU.

The SDP announced its new leaders on Saturday, following a vote by party members. While Finance Minister Olaf Scholz and Klara Geywitz - allies of Merkel - were tipped to win, the leadership went to leftists Norbert Walter-Borjans and Saskia Esken.

Both politicians have called for higher taxes on the wealthy, more government investment in infrastructure and climate change measures, and increased welfare spending, regardless of whether the country's budget slips into deficit or not.

The pair represent a bloc of SPD voters unhappy with the party's role in Merkel's centrist coalition. While many of these voters would advocate a complete break with the chancellor's Christian Democrats (CDU), Walter-Borjans said he will not leave yet.

"We have always said this is not just about whether we leave immediately or stay in for the duration," he told Phoenix television. "We must improve the policies and perhaps loosen the black zero," he added, a reference to Merkel's insistence on a balanced budget.

Both Merkel and her SPD partners have seen their support slipping in regional elections this year. With its new leadership, the SPD is now in a position to ram through its proposals, and Merkel likely now knows that if she fails to loosen her budgetary restrictions, the SPD could easily walk away from the coalition and end her nearly 15-year stint in the chancellery.

Amid the shakeup, her party has promised to work with the new SPD leadership.

"We want to rule Germany well. We have created a foundation for this between the conservatives and the SPD. Nothing has changed in this foundation," party spokesman Paul Ziemiak said.