Germany's Greens vowed to block plans by likely next chancellor Friedrich Merz for a massive increase in state borrowing but left room for compromise on Monday on measures to revamp the military and revive growth in Europe's biggest economy.

German election winner Friedrich Merz's conservatives and the Social Democrats (SPD) have concluded preliminary talks towards forming a coalition government, heads of the parties said on Saturday.

A senior ally of Germany's likely next chancellor Friedrich Merz on Tuesday was optimistic about securing support for a massive increase in state borrowing this month, seeing the basis for a deal on defence with the Greens party after emergency talks.

Germany’s Greens are ready to negotiate and are hoping for an agreement by the end of this week in a dispute over defense spending with the country’s prospective next ruling coalition led by Chancellor-in-waiting Friedrich Merz.