The Social Democrats (SPD) voted on Sunday in favor of another coalition with Chancellor Angela Merkels conservatives. This sets the way clear for the formation of a new government in Europes largest economy after months of political uncertainty. The Social Democrats had furiously debated whether to extend the so-called grand coalition of left and right for another four years after suffering a slump in last Septembers election. Two thirds of the membership voted "yes" to the deal – a wider margin than many had expected -- meaning Merkel could be sworn in for a fourth term as early as the middle of the month in a repeat of the grand coalition that has governed since 2013. The challenges are piling up for Merkel, who has been acting chancellor for more than five months since an inconclusive election, with the European Union looking for leadership on economic and security issues and France seeking a partner for President Emmanuel Macrons ambitious EU reform plans. Macron hailed the development as "good news for Europe". A statement from his office added: "France and Germany will work together on new initiatives in the coming weeks to bring the European project forward." Acting SPD leader Olaf Scholz announced the result to applause from activists lining the balconies around the atrium of the partys Berlin headquarters early on Sunday. "We now have clarity: the SPD will join the next German government," Scholz said. The party had initially planned to go into opposition after its worst election result since Germany became a federal republic in 1949. In the next few days, the Social Democrats will put forward six names — three women and three men — to lead the ministries they will control in the upcoming coalition, he said. Parliament is expected to meet next week to elect Merkel as chancellor. Merkel, in power since 2005, took to her partys Twitter feed to congratulate the SPD. "I look forward to working with the SPD again for the good of our country," she said. The SPD ballot pitted the leadership of the center-left party against the radical youth wing, which wanted the SPD to rebuild in opposition after a disastrous election showing. "Im happy it worked out this way," Andrea Nahles, the SPDs likely next leader, told Reuters. Scholz declined to comment on reports that he would be finance minister, saying only that the SPD would appoint three men and three women to the federal cabinet. As part of the price for its support, the SPD will take the helm at key ministries, including the finance ministry. The outcome means the far-right Alternative for Germany (AfD) will be the largest parliamentary opposition party. In a tweet, they labeled the SPDs decision a "catastrophe" for Germany, promising fierce opposition to the government. Kevin Kuehnert, head of the SPDs youth wing, said he was disappointed but that the "Jusos" (youth wing) would keep up their criticism, signaling that, after bringing in a flood of new members, they would be a thorn in the leaderships side. "Criticism of the grand coalition remains. The SPD needs to be more like it has been in recent weeks and less like it has been in recent years - the Jusos will ensure this," he tweeted. The party, already one of Europes largest, has seen tens of thousands of new members join this year. Turn-out in the poll was over 78 percent. Dietmar Woidke, a member of Social Democrats national executive, said the new government cant simply cite its strong economic record but needs to address the everyday concerns of voters that contributed to the rise of the AfD, especially in the east of the country. "The country has never been so successful, but theres a lot of insecurity," Woidke, who is also governor of the eastern state of Brandenburg, told The Associated Press. "If you dont take care of peoples everyday worries, then you wont reach them anymore." German business greeted with relief the news that Germany would get a government after its longest-ever post-election interregnum. "While the United States are starting a trade war and China is challenge our industrial leadership, we have been unnecessarily self-absorbed," engineering trade union VDMAs managing director Thilo Brodtmann said. The SPD was forced to revisit its original plan to go into opposition after the failure of Merkels initial attempt to form a coalition with two smaller parties. With her conservatives, they thrashed out a coalition agreement which SPD leaders hailed for its commitments to strengthening the EU and giving them key government roles.