Merkel warns EU is prepared to accept no-deal Brexit - Financial Times

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Angela Merkel said on Wednesday that Britain and the EU must figure out a way to minimise the risk of unfair competition between their markets, warning that Brussels will accept a no-deal outcome in trade talks if this cannot be achieved.

The German chancellor set out a stark choice for Boris Johnson as Britain’s prime minister prepared to travel to Brussels for make-or-break talks with European Commission president Ursula von der Leyen, saying any deal with Britain must not undermine the EU’s single market.

Meanwhile, Mr Johnson set out what appeared to be his own negotiating red lines, while insisting to MPs at prime minister’s questions that “a good deal is still there to be done”.

He claimed that the EU wanted to leave Britain as “the only country in the world not to have sovereign control over its own fishing waters”.

Mr Johnson also said that the EU was insisting that “if they pass a new law in future with which we in this country don’t comply with, or follow suit, they would automatically have the right to punish us and retaliate”.

To cheers from Tory MPs, he said: “They are not terms that any British prime minister could accept.” However, his choice of language did seem designed to provide him some room for manoeuvre.

Mr Johnson could claim to have secured sovereign control of British waters while at the same time agreeing to allow EU boats continue to operate in them.

Similarly, his criticism of the “automatic right” of the EU to punish Britain if it deviated from Brussels on regulatory standards suggested there might be some area of compromise, if some kind of independent body was involved to arbitrate.

Mr Johnson’s aides pointed out that no such body had been proposed and that the EU was setting “a very low bar for what they say constitutes an impact on trade”.

Earlier, Ms Merkel cautioned that the meeting might not provide the sought-after clarity ahead of a summit of EU leaders scheduled to begin in the Belgian capital early on Thursday afternoon.

“There is still the chance of an agreement. I don’t think we’ll know tomorrow if it will succeed or not, I can’t promise that,” the veteran leader told German MPs. “But . . . if there are conditions from the British side that we can’t accept, we are prepared to go down a path without a trade deal.” 

Ms Merkel said that coming up with a system to handle differences that could develop in areas such as environmental law and labour standards was “the really big question where we need a satisfactory answer”.

“We have to figure out how each side will react when the legal situation in the EU or the UK changes,” she said. “We can’t just say — let’s not talk about it.

“We need a level playing field, not only for today, but also for tomorrow and the day after tomorrow.

“For that we need to agree an arrangement for how the other side should react when the other side changes its legal position. Otherwise we get unfair competition conditions.”

The question of how to preserve a “level playing field” for business is one of the main sticking points that have dogged the negotiations along with the vexed issue of EU fishing rights in UK waters.

One idea on the negotiating table is for an “evolution mechanism” that would allow either side to reduce access to its markets if rules in areas such as labour rights and environmental standards diverge over time. But the UK has rejected the idea as overly constraining on its regulatory freedom.

One senior British official said a deal might not be possible but that Mr Johnson hoped the discussion with Ms von der Leyen would “inject some political impetus that would allow the negotiators to try and finish the job”.

The official added: “If we can make progress at a political level, it may allow Lord Frost and his team to resume negotiations over the coming days.” David Frost, the UK’s chief negotiator, and Michel Barnier, his EU counterpart, are expected to join the dinner.

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Merkel warns EU is prepared to accept no-deal Brexit - Financial Times
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