EU must prepare for no-deal Brexit, says Merkel addressing European lawmakers

Germany will continue to push to seal a new partnership agreement with Britain by the end of the year but the European Union should prepare for an abrupt split of ties from 2021, Chancellor Angela Merkel said on Wednesday.

“Progress in negotiations thus far has been slim, to put it diplomatically,” Merkel told the European Parliament as Germany assumed the EU’s rotating presidency for the rest of the year.

“We have agreed with the UK to accelerate the pace of the talks ... I will continue to push for a good solution but we should also prepare for a possibility of a no-deal scenario.”

Looking for EU agreement on coronavirus stimulus

Speaking to European lawmakers in Brussels, Merkel also called for a swift agreement on the European Union’s mass economic stimulus to advance unity that would strengthen the bloc as it recovers from the coronavirus crisis.

Merkel called the pandemic the biggest challenge ever for the EU, wherethe euro zone economy is set to shed a record 8.7 percent this year.

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“We all know that my visit today is taking place against the background of the biggest trial the European Union has faced in its history,” she said on her first foreign trip since coronavirus struck in Europe.

“Europe will emerge from the crisis stronger than ever if we strengthen cohesion and solidarity,” she added as parliamentarians -- all wearing face masks -- sat separated by empty seats.

German Chancellor Angela Merkel leaves the European Parliament after attending a plenary session in Brussels, Belgium, on July 8, 2020. (Reuters)

Merkel said her priorities included shoring up fundamental rights that the health emergency has threatened. She also underlined the need for solidarity across the 27-nation EU, which has been tested in recent months as governments acted alone to secure medical kit or tighten their borders.

Merkel -- the EU’s most prominent leader -- said the depth of economic crisis caused by the pandemic meant that member states
would need to compromise to sign off on a joint recovery fund.

“We want to reach an agreement swiftly, we have seen a greateconomic upheaval and we cannot waste any time,” she said. “I
hope we will reach an agreement before the summer recess.”

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Fiscally conservative and wealthy northern countries have so far failed to agree with the high-debt southern states hardest hit by the pandemic over the proposed 750-billion-euro ($847 billion) fund that would be tied to the next joint budget worth another 1.1 trillion euros in 2021-27.

EU leaders will try to narrow their differences at face-to-face talks in Brussels on July 17-18.

“We have seen lies and disinformation, and that is no way to fight a pandemic. Democracies need truth and transparency,” Merkel said, stressing the need for Europe “at a time of huge upheaval to rely more on itself.”

Lawmakers set expectations high for Merkel, the leader of the EU’s largest economy, to deal with other challenges from climate change to its troubled ties with China to Brexit.