The German chancellor said she had been trapped in a recurring conversation with the British Prime Minister since the EU referendum in 2016.
Speaking to a “secret” press meeting at the World Economic Forum in Davos, Ms Merkel claimed Ms May had repeatedly asked her to “make me an offer”, according to a report by ITV political pundit Robert Peston.
Ms Merkel said that when she replied “but you’re leaving – we don’t have to make you an offer. Come on what do you want?”, Ms May replied again, “Make me an offer.”
“And so, according to Mrs Merkel, the two find themselves trapped in a recurring loop of ‘what do you want?’ and ‘make me an offer’,” Mr Peston wrote on his Facebook page.
But while journalists laughed at the exchange, others have been quick to suggest the conversation, if it took place as reported, should worry those hoping Britain is on course to secure a prosperous future trading relationship with the EU.
It follows reports of growing divisions within Ms May’s Conservatives over the long-term trading arrangement Britain wants with the EU.
A planned major speech next month to set out Ms May's vision is reported to have been downgraded because the Cabinet cannot agree on its aims – although Downing Street denies it was ever intended to be a major policy-defining address.
Brexiteer Tories have demanded the sacking of Chancellor Philip Hammond in recent days over his call for an ultra-soft Brexit.
Meanwhile, more Tory MPs are reportedly preparing to sign letters demanding a vote of no confidence in Ms May’s leadership, taking the total closer to the 48 required to trigger the ballot.
It comes after Brexit Secretary David Davis was forced to admit he was wrong to say the UK would be able negotiate a free trade area “massively larger than the EU” within two years of exiting the bloc during a Brexit Select Committee meeting last week.