The German government and opposition on Thursday reached a deal which paved the way for parliament to ratify the EU fiscal pact and the permanent bailout scheme.

Head of the main opposition Social Democrats (SPD) Sigmar Gabriel welcomed the agreement, saying it would pave the way for forming a "coalition of the willing" among EU member states and pushing forward the implementation of a financial transaction tax.

After several weeks of negotiations, the opposition also reached an accord with the government on necessary measures to foster economic growth and create jobs, Gabriel said.

Volker Kauder, fraction leader of Merkel's ruling conservatives in German parliament, said it was "a good sign for Europe."

German Chancellor Angela Merkel needs a two-thirds majority in parliament on June 29 to ratify the European Stability Mechanism (ESM) so that it can come into effect on July 1, together with Europe's budget discipline pact.

"Overall, it is the outcome that I can take to my group with confidence and recommend agreement of the whole package," said Frank-Walter Steinmeier, head of the SPD's parliamentary group.