By Michael Nienaber
BERLIN (Reuters) - The leader of Germany's Social Democrats (SPD), who are expected to enter talks with Chancellor Angela Merkel's conservatives on forming a coalition government, said Europe needed a joint finance minister and a euro zone budget to boost investment.
"If we want Europe to remain strong in the long term, then we also must enable it to act and ensure people see a tangible difference in their lives," SPD leader Martin Schulz told a business conference in Berlin.
To achieve this goal, Europe needs a euro zone budget for more investment and a joint European finance minister, Schulz said in reference to French President Emmanuel Macron's euro zone reform proposals.
German President Frank-Walter Steinmeier will host a joint meeting on Thursday between Chancellor Angela Merkel, her Bavarian conservative ally Horst Seehofer and Schulz as part of his efforts to facilitate the formation of a stable government.
More than two months after its federal election, Germany is still without a government after talks to form a three-way coalition between Merkel's conservatives, the business-friendly FDP and the Greens collapsed mid-November.
Merkel has repeatedly said she wants to strengthen Franco-German cooperation and signalled her willingness to discuss Macron's euro zone reform proposals.
During the exploratory talks for a three-way coalition, Merkel's conservatives and the Greens agreed there was a need for a "fiscal capacity" to buffer extraordinary, unpredictable economic emergency situations which are beyond the control of individual member states. The FDP was against the creation of such a fiscal capacity.
Schulz, who has previously been strongly opposed to another "grand coalition" with Merkel's conservatives, said he ruled nothing out ahead of the preliminary talks.
"I can not tell you what the outcome of these talks will be. I can ensure you only this: That I'll campaign for the best solution for our country, that my party is aware of its overall responsibility for political stability," Schulz said.
"It's clear that we need reliability and stability. But it's also clear that we need change," Schulz said, repeating his call for more investments in schools and digital infrastructure. He also demanded more measures to ensure equal rights for women.
Stung by their previous experience of serving as junior partner in Merkel-led governments - in 2005-09 and again in 2013-17 - the SPD rank-and-file membership shares Schulz's reticence about joining a new coalition.
Many SPD members favour a looser arrangement whereby the SPD agrees to tolerate a Merkel-led minority government, supporting or at least agreeing not to vote against certain measures.
(Reporting by Michael Nienaber; Editing by Michelle Martin and Alison Williams)