BERLIN - German Chancellor Angela Merkel's conservative Chrstian Democrats, or CDU, and the center-left Social Democrats traded barbs about migration and tax cuts on Tuesday amid mounting questions about whether they can agree to renew the "grand coalition" that ruled the country for the past four years.

Merkel, under pressure after failing to form a government three months after national elections, hopes to secure a fourth term in office by persuading the SPD to join the government despite punishing losses in September's election.

Party leaders were scheduled to meet for preliminary talks on Wednesday ahead of exploratory talks scheduled for Jan 7 through Jan 12, but a growing number of politicians now say Merkel might have to rule with a minority government, or face new elections.

SPD deputy leader Thorsten Schaefer-Guembel said recent comments by some conservatives were "counterproductive to the formation of any form of government".

He said a deal on a new coalition was far from certain and it was unclear if the talks could develop sufficient trust.

"A minority government remains an option, even if Chancellor Angela Merkel doesn't want to acknowledge that," he said in an interview on Tuesday.

Schaefer-Guembel cited differences on a variety of issues and rejected as "absurd" proposals by some conservatives to cut taxes for high-income earners.

Merkel's CDU and the SPD are also at odds over healthcare, immigration, Europe, work regulations and pensions.

Schaefer-Guembel said he backed calls by SPD parliamentary leader Andrea Nahles to raise taxes for the wealthiest and urge fresh efforts to prevent big companies from evading taxes.

The Bavarian sister party of the Christian Democrats, the Christian Social Union, or CSU, has distanced itself from the SPD on corporate tax cuts, reductions in benefits for asylum-seekers, higher military spending and limits on immigration.

The powerful economic council of Merkel's Christian Democrats, said it will urge CSU party leaders to push for a minority government when they meet this week, arguing that Germany would face "enormous financial burdens for generations" if the SPD pushed through its spending plans in a coalition.

"A grand coalition will be more expensive in the long term than a minority government," Wolfgang Steiger, secretary-general of the council, told the Augsburger Allgemeine newspaper.

Reuters