Brexit: EU must prepare for no-deal, Merkel warns

The European Union must prepare for the possible failure of Brexit trade talks with the UK, Angela Merkel has said.

Speaking in the German parliament the chancellor said negotiations were being accelerated to try and reach a deal in the autumn that could be ratified by the end of the year.

But she told the Bundestag that the EU "must and should prepare for a situation in which an agreement does not happen".

She added: "The progress made during the negotiations have been, to put it mildly, minimal. With Great Britain, we have agreed to speed up these negotiations to be able to agree on a deal in autumn, which would then also need to be ratified until the end of the year."

Her warning comes as the deadline for extending talks passes, with negotiations now surely set to end on 31 December with or without a deal.

Both side met face-to-face for the first time in months on Monday as UK negotiators travelled to Brussels. Previously rounds of talks have been held via videolink because of the pressures of the cornavirus pandemic.

Both sides this month agreed to intensify the schedule of discussions, but issues like fishing rights, EU regulations, governance, and police cooperation and proving to be major sticking points.

The latest spat between the two negotiating parties this week came over the issue of financial services.

On Tuesday EU chief negotiator Michel Barnier said that the UK has not met the necessary deadline to apply to give UK financial institutions access to EU markets through "equivalence" with EU rules.

He suggested the British government had only answered four out of 28 questionnaires sent by the European Commission on the subject, meaning City firms are currently in the dark about what will happen on 1 January when the transition period ends.

Boris Johson's spokesperson told reporters in Westminster that the UK had "completed our own proportionate and thorough assessment" on time.

“These are straightforward assessments, as we start from having similar rules and a history of co-operation. We are ready to reach comprehensive findings of equivalence once the EU has clarified its position. We’ve completed our assessment of the EU, so we have done our aspect of it on time, and we are now returning the 1,000 pages they sent to us late.

“We continue to believe that comprehensive mutual findings of equivalence between the UK and EU are in the best interests of both parties. We remain committed to continuing dialogue with the EU about their intentions on this.”

Asked about the passing of the transition period extension deadline, the spokesperson said: “It was never our intention to extend the transition period. We want to continue to work constructively with the EU and we believe that there is a free trade agreement to be reached but we have also been very clear that we will be prepared for either eventuality at the end of the year, whether that be an FTA or a trading relationship based on the same terms Australia currently has.”