The German Chancellor said the post-Brexit negotiations had shown little signs of progress in recent weeks despite the two sides accelerated efforts. But Mrs Merkel refused to admit defeat, insisting she would be kept “busy” until the end of the year trying to deliver a free-trade agreement. Speaking at the European Parliament in Brussels, Mrs Merkel said: “One key partner will remain the United Kingdom.
“We need to shape our future relationship and that will keep us busy over the next six months.
“Progress in the negotiations thus far have been slim, to put it diplomatically. We’ve agreed with the UK to accelerate the pace of talks to reach an agreement by the autumn – an agreement that can be ratified by the end of the year.
“I will continue to push for a good solution but we should also prepare for a possible no-deal scenario.”
Boris Johnson yesterday told Mrs Merkel that the UK is prepared to leave the EU’s single market and customs union on the same terms as Australia has with the bloc during a phone call with the German leader.
Angela Merkel warns the European Union to prepare for a no-deal Brexit
Angela Merkel in the European Parliament in Brussels
A Downing Street spokesman said: “On the future relationship, the Prime Minister underlined the UK’s commitment to working hard to find an early agreement out of the intensified talks process.
“He also noted that the UK would be ready to leave the transition period on Australia terms if an agreement could not in the end be reached.”
European Commission chief Ursula von der Leyen vowed to do her “utmost” to reach an agreement with Britain before the transition period expires at the end of the year.
The German, however, warned the bloc would not agree to an agreement at any cost.
Angela Merkel was updating MEPs on her plans for Germany’s presidency of the EU Council
She said the future relationship pact with Britain must “respect the core principles that bind us in Europe”.
Mrs Merkel’s intervention comes as negotiators work in London to break the deadlock over Brussels’ demands for a regulatory level-playing field and continued access to Britain’s fishing waters.
The two sides’ top negotiators held a private dinner at Downing Street to kick off the negotiations.
David Frost, the prime minister’s lead negotiator with the EU, said: “Delighted to meet my fellow chief negotiator Michel Barnier at No10 last night and to kick off today’s talks in London.”
Michel Barnier, the EU’s chief Brexit negotiator, on the Eurostar to London
Michel Barnier said: “Useful discussion, and a nice dinner, with David Frost last night.
“The EU team will continue negotiating in good faith today.
“We are working hard for a fair agreement with the UK, including on fisheries and a level-playing field.”
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The pair will hold further talks in Brussels next week before another official negotiating round in London on July 20.
Sources said the talks had been “positive” so far as the two sides work on a broad “landing zone” for a potential agreement.