With likely key coalition partner Martin Schulz, the leader of the Social Democrats (SPD) and former European Parliament president, pulling the strings over the balance of power, Brussels looks set to benefit if the deal is agreed.
More than three months after the German federal election Martin Schulz and Angela Merkel appear to be finally nearing agreement – with the European Union at the heart.
Mr Schulz still needs to finalise approval for the deal from his party but the draft indicates the direction the grand coalition is heading.
The deal has been translated into English by the Ghent European Law Institute, which highlighted how the first three pages of the proposed agreement is dedicated to Brussels.
The paper pays tribute to the EU and its role in Germany and said the country owed an “infinite debt to Europe”.
Germany’s proposed coalition focuses heavily on the EU
Angela Merkel is scrambling to remain in power in Germany
It begins: “The EU is a historically unique successful peace project and so it should remain in the future.
“The EU connects economic integration and prosperity with freedom, democracy and social justice.
“The core of this European vision is that the EU uses its political and economic weight to create peace outside its borders and security and prosperity inside.
“Germany has an infinite debt to Europe. Also because of this we are under an obligation to turn it into a success.
“To Germany, a strong and united Europe is the best guarantee for a good future in peace, freedom and prosperity.”
A successful deal would help Europe take “its destiny in its own hands” but the proposal acknowledged the European project was in need of “renewal and a new start”.
Martin Schulz is set to join a grand coalition in Germany
One of the more controversial aspects of the proposed deal is support for EU tax reforms.
The paper said: “We support a common consolidated tax base and minimum level for corporate taxes.
“Here the principle should apply that taxes should be levied in the country where profits are generated.
“We want to take the initiative in this regard with France, also to formulate a European response to international developments and challenges, notably in the US, in this area.”
They said this and other aims could be achieved by giving the EU – and especially the Parliament – more power.
The grand coalition proposed: “To realise these objectives, we want to strengthen the capacity of the EU, in particular that of the European Parliament. We want to strengthen the EU financially, to allow it to better exercise its tasks.
“We are prepared to increase Germany’s contribution to the EU budget.”
With Britain leaving the EU, Germany proposed working even closer with France, strengthening an alliance from which both sides have talked about punishing Britain.
The passage is a clear dig at Britain and a blatant attempt to place Germany and France at the influential heart of the EU.
The coalition proposal said: “The renewal of the EU will only succeed when Germany and France act together with combined strength. As a result, we want to renew and strengthen the French-German cooperation.”
Tensions are growing between France and Britain. Today, President Emmanuel Macron demanded the Calais migrant deal with his neighbours is renegotiated.
Mrs May is due to meet the French leader on Thursday when he will call for more money from the UK to improve border security.
It is thought his backing for a positive Brexit deal will hinge on positive discussions this week.
Mr Macron will also use the meeting with Mrs May to demand Britain signs up to a new European army initiative keeping Britain tied to EU defence post-Brexit.