Angela Merkel warns EU about danger of UK becoming Singapore-style low regulation banking haven ‘After the withdrawal of Britain, we will have an economic competitor at our own doorstep’

German Chancellor Angela Merkel has warned European allies of the danger of the UK becoming a Singapore-style magnet to international investment at their expense.

She said she believes that a deal can still be reached with Britain and she vowed to fight until the “last day” for an agreement.

Speaking in Berlin to the Bundestag, Germany’s lower parliamentary chamber, Mrs Merkel said yesterday there was still time to negotiate a deal before Britain’s scheduled departure from the bloc on 31 October.

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But she warned that Britain could adopt a low-tariff regime that could undermine EU economies.

‘Economic competitor’

“After the withdrawal of Britain, we will have an economic competitor at our own doorstep, even if we want to keep close economic, foreign and security cooperation and friendly relations,” she said.

The UK’s banking industry dwarfs that of any other European country, and is nearly three times the size as that of France or Germany.

Mrs Merkel said she regretted the exit of one of the EU’s “most important member states” in the coming months, but she insisted Germany was ready for a no-deal Brexit.

“I’m firmly convinced, as before, that we have every opportunity to do it in an orderly fashion, and the German government will work until the last day to ensure that that’s possible,” she said. “But I can also say that we’re prepared for a disorderly exit.”

Yellowhammer

A new Whitehall “Operation Yellowhammer” document was released on Wednesday night that warned the UK could face shortages of food and medicine and civil unrest if the UK left the EU without a deal.

Ministers published the information just three hours before the deadline imposed by Parliament, who had compelled the Government to publish the documents in a vote in the Commons.

Truck drivers face delays as long as two and a half days, with the disruption lasting for three months. The crunch at the Channel will have knock-on effects for fresh food – leading to shortages and price rises – and medicine. The papers say it is “not practical” to stockpile enough drugs to last for an extended time.

They also warn: “Protests and counter-protests will take place across the UK and may absorb significant amounts of police resource. There may also be a rise in public disorder and community tensions.”

The EU is planning to divert funds earmarked for natural disasters to help areas in member states that will be hit by a no-deal, particularly Ireland, Belgium and parts of Northern France.