Angela Merkel has backed a tougher line in Brexit talks ahead of a crunch meeting between Boris Johnson and the EU Commission president in Brussels today.
In a rare intervention on the subject ,the German chancellor said German businesses could not be expected to compete under the conditions insisted on by the UK.
It comes as Mr Johnson said no British prime minister could accept the proposals being put forward by the EU.
The key dispute is over the so-called “level playing field” on regulations and centres around whether the UK will be held to a simple “non-regression” clause on labour and environmental standards, or whether it would have to give further guarantees.
Under the tougher “ratchet clause” plan backed by some EU member states, including Ms Merkel, Britain would sign up to increasing its standards in line with the EU’s, albeit in its own way.
But the regression clause sought by the UK would simply mean standards could not be reduced from their current level.
Speaking in the Bundestag on Wednesday, Ms Merkel told her MPs: “We must have a level playing field not just for today, but we must have one for tomorrow or the day after, and to do this we must have agreements on how one can react if the other changes their legal situation.
“Otherwise there will be unfair competitive conditions that we cannot ask of our companies.”
Her intervention comes after The Independent revealed that EU trade unions are lobbying behind the scenes for the stricter approach.
A letter from the general secretary of the ETUC (European Trade Union Confederation) to negotiator Michel Barnier warned of “concern” that the EU could drop the tougher “ratchet” plan.
The issue has received support from member states, like Germany, who are normally relatively sympathetic to the UK.
They are concerned that Britain, the fifth or sixth biggest economy in the world sitting on their doorstep, would be able to outcompete the EU by adopting lower standards in the future.
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But the UK government says the whole point of Brexit is that it must be free to diverge from the UK and adopt a different economic model if it chooses to.
“There is still the chance of an agreement,” Ms Merkel told the German parliament.
“One thing is clear: the integrity of the [EU’s] internal market must be preserved.
“If there are conditions from the British side which we cannot accept, we are prepared to go down a road which is without an exit agreement.”
Mr Johnson is set to meet the European Commission president Ursula von der Leyen for dinner on Brussels, where they will hope to unblock talks and avert a damaging no-deal at the end of the month.
Speaking in the Commons on Wednesday he told MPs: “Our friends in the EU are currently insisting that if they pass a new law in the future with which we in this country do not comply or don’t follow suit, then they want the automatic right to punish us and to retaliate.
“Secondly, they are saying that the UK should be the only country in the world not to have sovereign control over its fishing waters.
“I don’t believe that those are terms that any prime minister of this country should accept.”
