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Economist Christian Odendahl and Sophia Besch, a research fellow at the Centre for European Reform, wrote in a joint paper: “Schulz, an outsider to Berlin politics, entered the race as a candidate promising to bring change. But the Social Democrats have failed to deliver: their programme struggles to distinguish itself from Merkel’s platform.

Christian Odendahl, chief economist at think-tank the Centre for European Reform, said that despite the efforts to distance the plan from the concept of debt mutualisation, Germany was likely to regard it with suspicion.
“The Germans feel that this is a clever way of persuading them to sign up to something which at least has the potential to become debt mutualisation by the back door,” he said. “Particularly if there was an agency doing the structuring and sales of these products, the markets would perceive that as 100 per cent safe and expect a bailout if it goes wrong.”

“The UK government knows that some of the member-states are worried about the commission’s position that transition arrangements cannot be discussed until ‘sufficient progress’ has been made on divorce arrangements and agreeing the final relationship,” said Charles Grant, director of the Centre for European Reform. “They are hoping the Nordics in particular will put pressure on Barnier to acknowledge quickly that sufficient progress has been made on those areas.”

Charles Grant, director of the Centre for European Reform think-tank, said such a proposal had merit and could allow the Brexit talks to progress to the next phase. “There is a strong feeling among UK and EU officials that the best way to present the Brexit bill is as payments during a transition, in return for market access,” he said. “Three years of paying about £10 billion a year would mean the UK handing over a large part of what the EU wants — not all of it, but enough to create goodwill and probably to get the EU to talk about trade.”