After moving her own party, the Christian Democrats, to the left, in her third term as chancellor, Merkel's only coalition partner is the Social Democrats, the Times reported Saturday.
Germany has imposed tough austerity budgeting on eurozone partners that have required international bailouts.
Various political initiatives under discussion include establishing Germany's first minimum wage, spending on education and infrastructure projects, pension reform, higher government funding for child care, and higher taxes for the country's top income earners, the Times said.
That may anger Greeks, Spaniards, Portuguese and the Irish -- countries that have been forced to accept tough austerity budgets to meet German mandates in return for receiving international assistance -- much of which has come from Germany, whose economy is the largest in Europe.
Many economists have long said Germany must increase its domestic market to help balance out the wealth in Europe.
With Germany maintaining its position as the region's largest exporter with no reciprocal importing, "the imbalance in Europe will only increase," said Nils Diederich, a politics and social sciences professor at the Free University in Berlin.
"The Germans say to themselves, 'We are a family, and the other Europeans are distant relatives,'" said Jurgen Falter, a professor of political science at Johannes Gutenberg University Mainz.
"In a family, you stand together; distant relatives, you help when you can," he said.
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