Olaf Scholz has been sworn in as Germany's new chancellor after the Bundestag backed him to replace Angela Merkel after 16 years.

The Social Democrat (SPD) leader had been the favorite for the job since his party gained the biggest vote in Germany's election but it was the finalizing of a coalition agreement with the Greens and Free Democrats that sealed the position.

The parliament backed Scholz by 395 votes to 303 and he was then confirmed in the position by president Frank-Walter Steinmeier before taking his oath of office in front of applauding MPs.

Merkel's tenure has defined Germany, and to a large extent Europe, for the past decade and a half, as neighboring nations saw governments collapse and leaders come and go Belgium has had eight prime ministers over the same period.

The new coalition has adopted the slogan "Dare More Progress" as it seeks to accelerate the transition of the German economy towards greener and more digital businesses. Merkel was also seen by some voters as too cautious in foreign policy, particularly over relations with key partners such as Russia and China.