In modern Germany, grand coalition describes a governing coalition of the Christian Democrats (together with the Bavarian CSU) and the Social Democrats, as they are the two largest parties.
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In the Weimar Republic of 1919-1933, the term "grand coalition" was used for a coalition that included the Social Democratic SPD, the Catholic Centre Party and the liberal parties DDP and DVP. Such a coalition was in power in 1923 and in 1928-1930, although the latter was not a tight coalition in the modern sense.
In the post-war politics of Germany, two grand coalitions (Große Koalition) have been formed at the national level. Germany has historically tended to favor narrow coalitions between parties with closer natural alignments, such as SPD-FDP, SPD-Green or CDU/CSU-FDP coalitions. A grand coalition would be likely only if one of these natural alignments broke down, or if far left or far right parties were to secure significant representation in the Bundestag.
On December 1st 1966, the government was formed by the Social Democratic Party of Germany and the Christian Democratic Union of Germany, the two major political parties in the Federal Republic of Germany. It was the result of arguments about tax rises between the CDU/CSU-FDP coalition of the time. The FDP ministers stood down and a new government was formed with the SPD under Kurt Georg Kiesinger of the CDU. This lasted until 1969.
After the inconclusive result of the 2005 German federal election, neither of the traditional coalitions could form a majority government. An ideologically coherent coalition existed on the left, comprising the SPD, Greens, and the Left Party, but a desire to exclude the Left Party from government (i.e. a cordon sanitaire) led the leaders of the SPD and the CDU/CSU to agree to form a grand coalition with CDU leader Angela Merkel as chancellor and an equal number of cabinet seats for each party. The chancellor was elected on November 22, and the first Merkel Cabinet took office.
The second grand coalition ended when after the 2009 federal election Angela Merkel on October 28, was re-elected by CDU/CSU and FDP Bundestag MPs and formed the second Merkel Cabinet.
Grand coalitions are more common at the state level in Germany, because other parties might be stronger there than they are on the federal level. For example in several East German states, the party Die Linke often makes it difficult to form a coalition of SPD and Greens or CDU and FDP. As of November 2011, Berlin, Mecklenburg-Western Pomerania, Saxony-Anhalt and Thuringia are governed by coalitions between the CDU and the SPD.