See how the new Government of Germany will be constituted 2:58
(CNN) -
Three German political parties have sealed a deal for a new government, with leftist Olaf Scholz as the next proposed chancellor after lengthy coalition negotiations and landmark elections in which Angela Merkel leaves office after 16 years at the helm.
Under the agreement announced Wednesday in Berlin, Scholz of the center-left Social Democratic Party (SPD) will lead a three-party coalition with his partners, the Greens and pro-business Free Democrats.
The decision comes after close elections in September and two months of negotiations to form a new government.
Scholz, accompanied by the leaders of the coalition partners, told a press conference that the "semaphore government" is already here, referring to the red, yellow and green colors of the respective parties.
"We want to be bold on climate and industry," he said.
The agreement - which sets out the government's vision for its four-year term - will now go to the consideration of party members at large.
Barring last minute setbacks, Scholz will take up his post early next month.
Angela Merkel makes her last visit to the Vatican 1:38
The parties of the coalition of the new government of Germany are not the traditional "bedfellows".
Free Democrats, who are pro-business, tend to align with the center-right, rather than with the SPD and Greens, who lean to the left.
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One of the coalition's sticking points has been funding the Greens' ambitious climate plans, as the Free Democrats oppose raising taxes.
But when it comes to the coalition negotiations in Germany, this has been quite fast.
After the 2017 elections, it took more than four months to form a new government.
Merkel's party loses at the polls, Scholz stands as winner
It also marks the end of the Merkel era and relegates her center-right party, the Christian Democratic Union (CDU), and her sister party, the Christian Social Union (CSU), to the opposition after 16 years in power.
The new Chancellor Scholz will take the helm of Europe's largest economy at a time of growing diplomatic uncertainty in the European Union: aggressions from Russia and Belarus, and threats to the rule of law from Poland and Hungary.
As Germany emerges from its worst climate catastrophe in recent years - the devastating summer floods that killed 180 people - the Greens will also play an important role in leading the country towards a future without coal.
Germany Angela Merkel