The Social Democrats (SPD), Germany's traditional labour party, have responded to a series of election debacles with a sweeping policy review -- including easing rules for unemployment benefits, boosting state pensions and raising the minimum wage.
News portal Spiegel Online considered the change of course a deliberate SPD attempt to provoke a breakup of the year-old pact with Merkel's CDU, an alliance also known as the "GroKo" - a German reference to grand coalition.
"The SPD leadership has launched Operation Exit," a Spiegel commentary said of the SPD plans to break with the more centrist policies introduced by its ex-chancellor Gerhard Schroeder.
SPD chief Andrea Nahles, presenting the change of course Monday, denied any plans to implode the left-right government, saying this had been "a non-issue" in the party's deliberations.
Merkel's CDU and pro-business groups quickly rejected the ideas, arguing that they breached the joint policy programme of the coalition government and would cost billions of euros.
SPD deputy leader Ralf Stegner fired back in a tweet that the SPD's ideas were "scaring the class adversary".
Break with past
The SPD's new approach signals a clear break with the sweeping social welfare reforms of Schroeder, who ruled Germany from 1998 to 2005 before losing to Merkel.
Schroeder's so-called Hartz reforms are credited with revitalising the German economy but also criticised for the generating the social pain that led many SPD rank-and-file to defect.
With its new programme, the SPD is hoping to win back voters who drifted to the far-left Die Linke and the far-right, anti-immigration Alternative for Germany (AfD) parties.
The next ballot-box test will be May's European Parliament elections, followed by three regional polls in ex-communist East Germany.
With the SPD now polling well below 20 percent, Nahles has faced pressure from within the SPD, including from retired Schroeder, 74, who recently criticised her for having made "amateur's mistakes".
Former party chief and foreign minister Sigmar Gabriel is also working on a comeback after being sidelined by Nahles last year.
But Nahles has received support from many in the SPD for the new policy course.
Youth wing leader Kevin Kuehnert, a fierce and outspoken critic of the GroKo, praised the new programme as "an important act of self-liberation" for the party.