“I personally am of the view that we will have to discuss further with the [European] Commission when this freedom of movement applies from," Merkel told the Confederation of German Employers' Associations on Tuesday evening.
“The question of when lifelong guarantees come into effect according to the social standard of the host country must certainly be taken into consideration.”
This was played up big by the Daily Mail, which claimed it was an admission that the EU was planning to overhaul its rules on migration in an attempt to keep Britain in the free market.
“Mrs Merkel's remarks will be an encouragement to Theresa May as they show she is looking at ways to accommodate the Prime Minister's demands,” the Mail claimed.
The Daily Telegraph, meanwhile, said Merkel is “open to allowing countries like Britain to curb migration, something she was steadfastly opposed to in the build-up to the EU referendum in June.”
It was interesting to see that the German media had a rather different take on Merkel's comments to German business owners.
Although her speech to the industry group was largely ignored by German media, two conservative newspapers - the ones with the most Anglophile views - said she had made an unusually aggressive attack on Britain.
“In an untypically forthright manner, the Chancellor rejected Britain's demands for a privileged position within the single market,” Die Welt reported.
As Die Welt pointed out, Merkel said that if freedom of movement were weakened “we would bring the basics of the EU into danger.”
The Frankfurter Allgemeine Zeitung (FAZ) meanwhile summarized her speech as “no compromise with Britain on freedom of movement.”
Indeed, as even the British media realized, Merkel also said: “Were we to make an exception for the free movement of people with Britain, this would mean we would endanger principles of the whole internal market in the European Union, because everyone else will then want these exceptions."
So what to make of Merkel's so-called “softening” on freedom of movement?
It is in fact likely that she was simply stating the position of her government on EU nationals' rights, as her government is currently planning on applying them in Germany.
After fierce complaints from German states, who opposed giving out money to EU nationals who had moved to Germany but not yet worked, the federal government approved a law in October to exclude non-Germans from comprehensive welfare rights.
Under the draft legislation, which still needs to go through parliament, EU nationals who have never worked in Germany will have to wait five years before they can claim benefits.
So when Merkel mentioned “lifelong guarantees” and the “social standard of the host country” she was most likely referring to Germany's own attempts to more strictly define the terms of freedom of movement.
Germany's own plans have been criticized domestically as undermining the EU.
"The government is betraying the European idea," said Die Linke (Left Party) MP Sabine Zimmermann in October.
"The basic right to a subsistence allowance should apply to all people in Germany and should not be restricted."