Berlin CNN  — 

Germany’s left-leaning Social Democratic Party (SPD) will begin negotiations to form a ruling coalition after preliminary results showed the party narrowly winning the largest share of parliamentary seats following Sunday’s federal election.

With all 299 of Germany’s electoral districts reporting, the SPD won 25.7% of the vote, beating out the Christian Democratic Union (CDU), the centrist-right, conservative party of outgoing Chancellor Angela Merkel, which posted record losses by taking 24.1%, according to the Federal Returning Officer.

But there is still uncertainty over who will be the next leader of Germany. Both the SPD and the CDU with its coalition partner, the Christian Social Union (CSU), have said they want to begin coalition negotiations to form a new government.

The tight result means that two smaller parties – the Green Party, which took 14.8% of the votes, and the liberal Free Democratic Party (FDP), with 11.5% – will be the likely kingmakers.

“After potentially lengthy ‘sounding out’ talks, these two parties will either team up to put Olaf Scholz (the SPD leader) or – slightly less likely – Armin Laschet (of CDU/CSU) into the chancellor’s office,” said German expert Holger Schmieding, chief economist at Berenberg Bank.

Merkel, who over 16 years cemented her position as one of the world’s most successful political leaders, will stay in job until a coalition deal is negotiated – and that could take months.

After Merkel’s election win in September 2017, it took more than five months for a government to be formed. If that situation were to repeat itself, the new government wouldn’t form until after Christmas and Merkel would surpass Helmut Kohl as the longest serving chancellor of post-war Germany.

SPD leader Olaf Scholz waves to supporters at the party's headquarters in Berlin, on September 26.

‘Traffic light coalition’

Though the preliminary count gives the SPD a small lead over its closest rivals, the results mark a significant improvement for the party that took 20.5% of the vote in the last election in 2017.

Scholz said this proved that German voters wanted him to be next chancellor.

“Many citizens have put their crosses next to the SPD because they want there to be a change in government and also because they want the next chancellor of this country to be called Olaf Scholz,” he said in remarks at his party’s headquarters.

On Monday, he confirmed he will be seeking to build a coalition with the Greens and the FDP, dubbed “the Traffic Light” by German press, in reference to the official colors of the three parties.

“It is quite clear that you can deduct a mandate to govern, a government that is sustainable, and is sustained by the parties that have won, the SPD being one of them. That’s the Green party and the FDP. And hence we are going to try to forge away along those lines,” Scholz said.

The 63-year-old politician has served as the vice-chancellor and German finance minister in Merkel’s grand coalition government since 2018, earning him increased visibility as he navigated Germany’s economic response to the Covid-19 pandemic.

By contrast, the CDU leader Laschet told supporters that his party “cannot be content with this result,” while noting that the final result remained unclear.

“We can foresee that there could be a government with three parties,” he said, adding that his party would “do everything to try to build a coalition.”

Laschet added that the CDU had “got a mandate against a leftist government.”

While both of the main parties rejected the idea of continuing to govern together as a coalition, Laschet is hoping he could lure the Greens and the FDP to work with him instead of the SPD and form a “Jamaica Coalition,” another nickname based on the party colors.

The CDU had campaigned on a message of stability for the country after Merkel, seen as a steady pair of hands over the past nearly 16 years, steps down. But it is now coming to terms with what it itself called a bitter night of losses. Merkel’s own seat in northeast Mecklenburg-Vorpommern has flipped to the Social Democrats after the outgoing chancellor held it for 31 years.

Merkel’s constituency flipped to Anna Katharina Kassautzki, a 27-year-old who works at the University of Greifswald.

Kassautzki told CNN that Merkel leaves behind big shoes to fill. “She has done a lot for the constituency here and I think she was also often a strong chancellor and a role model for us – especially for young girls,” said Kassautzki.

Merkel showed that “women can also be in politics, women can also have power,” added Kassautzki. “Just creating visibility like that was very important.”

SPD members react to initial election results in Berlin on Sunday.

Meanwhile, Greens’ leader Annalena Baerbock said her party “led a campaign as we have never before experienced in this country – around the clock, until last night, the last second.”

Environmental concerns and economic worries have emerged as key issues in campaigning, with the former fueled by the deadly floods that devastated parts of Germany this summer.

Baerbock credited her party’s success to young and new voters. “This momentum from the market places, from so many [people] who joined our party in the last years, has led to this historical best result,” she said.

But, Baerbock added, the party had “wanted more” and had failed to do better in part because of her mistakes during campaigning. The Greens had big ambitions going into the vote, with some polls earlier this year showing them as having a chance of winning. When they announced Baerbock would be running for chancellor, it was the first time the party put forward an official candidate for the post.

“The Greens can be happy that they’ve improved in terms of results since the last election cycle, but they definitely did not fulfill expectations,” said Sudha David-Wilp, the deputy director of the Berlin office of the German Marshall Find of the United States.

“Baerbock didn’t meet the moment. At one point, the party was leading the pack, there were far greater expectations for them,” David-Wilp added.

The AfD’s lead candidate for chancellor, Alice Weidel, put on a brave face after exit polls showed a drop in support for the far-right party. Preliminary official results put the count at 10.3% of the vote, down from 12.6% in 2017.

“We are in the double figures, we have been able to assert ourselves,” she said, according to Reuters. “This assertion that we would be gone from parliament after one legislative period has utterly failed and we are very very happy.”

David-Wilp said the far right’s losses were likely down to the party’s performance during their first term in the parliament. “There was definitely a hullabaloo four years ago when the AfD became the largest opposition force in the Bundestag, but they’ve definitely had a lot of infighting, which hasn’t helped the party’s trajectory and right now, looking at the landscape, they seem to be more of a regional party in the former East,” she said.

‘We’ll miss her’

Robin Fugmann, 20, an ardent Scholz supporter, told CNN he was delighted by the results so far.

“It is really an amazing result, people believe in Olaf Scholz, people believe that Armin Laschet really cannot lead this country,” he said. “So we really have the mandate to lead a new government – I hope we will do so. And first of all we are going to celebrate because this is a really amazing result.”

Deborah Piraba, a 27-year-old law student and Young Christian Union Democrat, told CNN at the CDU headquarters that the results were “disappointing” but that nothing was lost yet.

“We have to consider that we are coming out of 16 years with Angela Merkel, whom I am a big fan of. I am already sad she is leaving the office,” she said. “We call her Mutti (Mom), she knew how to talk to people and has the connection with people and she has done so much for Germany. This made her so special comparing her with other politicians. I will also miss her sense of humor.”

CNN’s Salma Abdelaziz, Nadine Schmidt, Stephanie Halasz and Laura Smith-Spark contributed to reporting and writing.