After his party's disastrous result in the September 24 election Schultz had ruled out forming another so-called grand coalition with Merkel's Christian Democratic Union and Bavarian-only sister party, the Christian Social Union, like the one that has governed Germany for the last four years.
Schulz told reporters Friday that they'd agreed to keep their discussions confidential, but that he was now prepared to discuss with his party's leadership on Monday all options, including re-forming a grand coalition.
Schulz insisted his party would continue to talk about all options, which could include tolerating a Merkel minority government, possibly in tandem with the Green party. "As before, I remain sceptical that you can do that by carrying on "business as usual" in a grand coalition". "This is simply wrong", Schulz said, adding that the report appeared to be based on sources within Merkel's conservative CDU/CSU bloc. "The way that erroneous reports are circulated destroys trust".
Malu Dreyer, an SPD member and premier of the state of Rhineland-Palatinate, said she was sceptical the SPD could agree a "convincing, substantive proposal" with conservatives.
Schulz previously opposed a "grand coalition" with the CDU/CSU, arguing that the election result meant voters had rejected the option of another grand coalition between the SPD and the CDU/CSU.
FILE PHOTO: Acting Chancellor Angela Merkel attends a news conference at the Christian Democratic Union (CDU) headquarters in Berlin, Germany, November 27, 2017.
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"We need big ideas for our country", said Manuela Schwesig, the state premier of Mecklenburg-Vorpommern and a former family minister. We should talk about each of these options. A resolution should then be formed at the party congress in the coming week.
However, several leading Social Democrat politicians have supported a coalition or are backing a minority CDU/CSU government.
Merkel's camp said the ball was in the SPD's court.
After the party convention of the SPD in the coming week, the CDU will discuss the way forward, according to Klaus Schueler, federal manager of the CDU.
Should it come to grand coalition negotiations, Schulz indicated he would push for the new government to become even more engaged at the European level, including standing behind French President Emmanuel Macron's push for broad reforms.
However, Schulz softened the stance on Friday as he said his party was willing to hold talks with the Union.