UPDATE 1-New SPD leaders to avoid outright call to quit German government

Leaders of Germany's Social Democrats are leaning away from proposing the party quit Chancellor Angela Merkel's government as they work on a motion to put to delegates at a party congress, party sources said. Norbert Walter-Borjans and Saskia Esken, leftist critics of the coalition with Merkel's conservatives, won a vote for the leadership of the SPD on Saturday, putting Europe's largest economy at a political crossroads.

But Esken and Walter-Borjans, interim SPD leader Malu Dreyer and Vice-Chancellor Olaf Scholz agreed on a wording on Tuesday for the motion that avoids setting tough conditions for staying in the coalition, three people familiar with the matter said. At the congress, starting on Friday, the SPD is set to demand that Merkel's conservatives discuss measures to stabilize Germany's slowing economy and improve an already agreed climate package, the sources said.

A draft of the main motion seen by Reuters showed that SPD leaders are set to call for a large public investment push that should not be hindered by "dogmatic positions" such as the government's "black zero" budget policy of no new debt. The SPD shares the view of leading economists and business groups that public investment of more than 450 billion euros ($500 billion) needed over the next 10 years could not be financed through the reallocation of existing funds alone, the draft said.

Public investment should not be limited to times of economic growth, the draft said, adding that high levels of investment would help local authorities as well as construction firms. "In this sense, the steady investment must not be prevented by dogmatic positions such as Schaeuble's black zero," the document said, referring to former Finance Minister Wolfgang Schaeuble, the mastermind of the self-imposed budget goal of not incurring any new debt.