German Vice Chancellor Franz Muentefering, the top Social Democrat (SPD) in Angela Merkel's right-left government, is resigning for family reasons in a move that could increase tensions in Berlin's "grand coalition".

Mr Muentefering, who famously labelled foreign investors "locusts" in 2005, is also stepping down as Labour Minister, a government spokesman said yesterday, setting the stage for a minor reshuffle of Chancellor Merkel's Cabinet.

Foreign Minister Frank- Walter Steinmeier is slated to take his place as Vice Chancellor, the number two government post, party sources told Reuters. Olaf Scholz, the SPD's whip in Parliament, is pegged to become Labour Minister.

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