The German chancellor’s comments came on Wednesday in a speech to the German parliament.
Merkel said that talks have so far produced “limited” progress, even after agreements from both sides that the negotiations should be intensified.
The German official said she would “continue to press for a good solution”, but added that both the EU and Germany should “prepare for the event that an agreement is not reached after all”.
Indeed, the most recent round of post-Brexit trade deal talks between the UK’s negotiator David Frost and his EU counterpart Michel Barnier concluded yesterday, with both later stating that little progress had been made.
Barnier said: “Our goal was to get negotiations successfully and quickly on a trajectory to reach an agreement.
“However, after four days of discussions, serious divergences remain.”
Angela Merkel warned EU to “prepare” for a no-deal Brexit scenario.
While Frost, on a slightly more optimistic note, added that although the week’s talks had been “comprehensive and useful”, they “also underlined the significant differences that still remain between us on a number of important issues”.
Trade talks have been at an impasse for several weeks, with competition rules understood to be a key sticking point.
Barnier said yesterday that the UK had set out demands including that the European Court of Justice have no future role in the UK.
The EU, meanwhile, has set about ensuring that the aforementioned competition rules are agreed and that “effective dispute settlement mechanisms” are in place.
Frost (L) and Barnier (R) both said this week’s talks had not borne much fruit.
In high level talks a couple of weeks ago, Boris Johnson and EU presidents agreed that trade talks needed “new momentum” following the lack of progress.
Pressure has perhaps intensified following the Prime Minister’s assertion that the UK would not extend the negotiation period with the EU beyond this year, meaning that the new rules between the UK and the EU will come into force on January 1 2021 whether there is a trade deal or not.
Boris Johnson said last month that there was a “very good” chance of both sides avoiding such a no-deal scenario and clinching a trade agreement this year.
The prime minister even added that he saw “no reason” why a deal could not be reached by July.
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Some weeks ago Johnson and EU officials agreed to more productive talks.
Businesses in the UK will likely be eager for an agreement either way soon rather than later, as it would give them time to prepare for whatever the situation may be come 2021.
Indeed, the EU is the Britain’s largest trading partner. More than half of UK imports in 2019 were from the EU, worth a total of £372 billion according to the House of Commons Library.
Conversely, the EU accounted for 43 percent of all UK exports last year, worth around £300 billion.
It’s perhaps particularly important for Wales, which exported a higher percentage of its goods to the EU in 2019 than any other region of the UK.
Boris Johnson has said he sees “no reason” why an EU agreement can’t happen this month.
As such, it’s important to know what the rules might be when 2020 comes to a close.
The next round of UK-EU trade talks are due to commence on the week beginning July 20 – though it’s understood that “talks” will be continuing in London next week.
Meanwhile, the UK’s trade talks with Japan are steaming ahead in comparison.
It’s though that negotiations between the two countries could conclude as early as this month, with Japan’s chief negotiator to Britain, Hiroshi Matsuura, noting at the end of May that Japan wanted to secure a deal with the UK as a matter of “highest priority”.