PM in Berlin faces Merkel on Brexit
BRITISH Prime Minister Theresa May travelled to Berlin yesterday to meet German leader Angela Merkel, hoping to overcome near-deadlock in her attempts to negotiate a Brexit deal with the European Union.
German officials say they are frustrated with Britain’s lack of clarity about what it wants after the split, including what new customs regime it wants and how closely it will stay aligned to the EU’s rules for goods and services.
Earlier this week, Germany called on Britain to offer more “concrete” plans.
While Britain’s politicians are consumed by Brexit, Germany is more preoccupied by the struggle to form the new government. Mrs Merkel is struggling to coax the Social Democrats to join her conservatives in a renewed “grand coalition”.
German officials have said there is no reason to expect Berlin to change its stance on Brexit when a new coalition government is finally formed.
The future of the eurozone and the governance reforms proposed by French President Emmanuel Macron are seen as more pressing items for Germany than Brexit. Mrs May was the third European prime minister Merkel received yesterday.
German officials believe that a failure to reach a deal with London before Britain’s formal departure from the EU in March 2019 will have far more serious consequences for Britain than for the rest of the bloc. Meanwhile, Mrs May’s Conservative government remains split over what sort of relationship Britain should have with the EU.
Eurosceptics in her party, such as her foreign minister Boris Johnson, are putting pressure on May to move Britain away from EU rules. Others, including Chancellor of the Exchequer Philip Hammond, favour as little disruption as possible.
Mrs May is under growing pressure to agree a transition deal with the EU by the end of next month to reassure businesses worried that Britain could leave the bloc without a deal next year. After Berlin, Mrs May will travel to a security conference in Munich today where she will give a speech on future security cooperation between Britain and the EU.
The British government, which has the largest defence budget among EU countries, hopes that offering to keep some of its security arrangements with the bloc will help it win concessions on future trading relations. Mrs May also discussed security issues with Mrs Merkel yesterday.
The pound fell yesterday after the dollar clawed back some ground and retail sales data disappointed, with traders watching for any positive signs from the Berlin visit.
The British currency fell 0.4 per cent to $1.4045 after trading as high as $1.4145 in Asian trading, with analysts saying most of yesterday’s sterling weakness was driven by a recovery by the dollar after a poor week.
Against the euro, the pound traded down 0.1 per cent at 88.88 pence per euro.
A falling dollar and signs that the Bank of England will tighten monetary policy faster than expected this year lifted sterling earlier this week, leaving the British currency still up around 1.6 per cent since Monday.