Social Democrats will announce on Sunday whether party members have backed a plan to continue their grand coalition with Mrs Merkel's Christian Democrats
Vote count under way to decide fate of Angela Merkel's leadership
Germany's Social Democrats began counting the votes of hundreds of thousands of party members who will decide if a new coalition under Chancellor Angela Merkel takes office, more than five months after a general election.
With the SPD's 464,000 members promised the final say on whether to enter a new "grand coalition" with her conservatives, 120 volunteers arrived at party headquarters to count the truckloads of ballots delivered on Saturday afternoon.
"We already know there will have been a very, very high level of participation," said the SPD's acting leader Olaf Scholz as he arrived ahead of the count.
His colleague Andrea Nahles said she was hopeful for a "Yes" vote but admitted to feeling "a bit nervous". Volunteers, having surrendered their phones, will conduct the count in strict secrecy. An announcement is expected on Sunday morning.
Germany, Europe's economic powerhouse, has faced months of uncertainty after voters returned a fragmented parliament. An earlier attempt to form a Merkel-led three-way coalition collapsed.
At the urging of President Frank-Walter Steinmeier, the SPD's then leader Martin Schulz promised members the final say on whether to repeat a "grand coalition" with Mrs Merkel's conservatives after first announcing he would lead the party into opposition.
Rejection of another tie-up with the conservatives "would be a disaster for Germany, the SPD and, above all, for Europe," SPD lawmaker Thomas Oppermann told Die Welt newspaper, forecasting that 55 per cent of members would back a coalition.
Mrs Merkel has seen several junior coalition partners come and go over 12 years in office, and many fear the SPD could dwindle into irrelevance if it props up her government for another four years.
The SPD's Jusos youth wing has been lobbying party members to vote against a re-run of the grand coalition, arguing they would do better to rebuild in opposition after the party's drubbing in the September election.
A "No" vote would throw the ball back into Steinmeier's court, who could push the pro-business Free Democrats, whose leader Christian Lindner torpedoed the earlier three-way talks, to have another go.
But Mr Lindner told the Funke newspaper group, a new election would be the best solution if SPD members voted "No".
On another option, a Merkel-led minority government, he said the FDP would examine legislative proposals on a case-by-case basis, but added: "Such a government would probably only last a few months anyway."
Manfred Weber, deputy leader of the Bavarian CSU, sister party to Merkel's Christian Democrats (CDU), also favoured a new election in the event of an SPD "No" vote, arguing a minority government would impair Germany's standing in Europe.
"Germany would remove itself as a serious factor in Europe and the world," he said.