Germany’s finance minister has warned Theresa May she will not be taken seriously by world leaders if she breaks a G20 agreement by slashing taxes to attract business after Brexit.

The Prime Minister has made clear she is ready to walk away from negotiations if the European Union only offers the UK a “punitive” trade deal.

Setting out her strategy on Tuesday, she warned that Britain would respond to any attempted punishment for Brexit by changing the basis of its economic model and reducing corporate taxes to attract investment.

But Wolfgang Schäuble said Mrs May’s claim that the country will emerge from Brexit as a “truly global Britain” would be undermined if she followed through on her warning.

She would be breaking an agreement reached by world leaders at 2015’s G20 summit in Antalya, Turkey, not to use corporate taxes to compete with other countries, he said.

Addressing a panel at the World Economic Forum in Davos, Switzerland, Mr Schäuble said: “The UK has always agreed and the G20 summit in Antalya said we will not use taxation (of) companies as a matter of instrument for competition, that has been agreed.

“And if we want to be taken serious we have to stick to what we have agreed.”

He went on: “I got Prime Minister May saying the UK will be a truly global economy.

“That has been agreed not in the EU, it has been agreed in the global forum of the G20 in Antalya, and therefore a truly global economy has to stick to what has been agreed globally, otherwise there will be a contradiction.

“And you can always count on the UK.”

Earlier German Chancellor Angela Merkel welcomed the fact that London had accepted that free movement of EU citizens was not something it could opt out of without losing other EU rights.

“There cannot be any cherry picking by Britain in Brexit negotiations,” she told an economic conference, adding that access to the bloc’s single market was ultimately linked to accepting the EU’s four freedoms – of movement of goods, capital, people and services.

Brexit Concerns Show all 26 1 /26 Brexit Concerns Brexit Concerns Brexit will put British patients at 'back of the queue' for new drugs Brexit will put British patients at the “back of the queue” for vital new drugs, the Government has been warned – forcing them to wait up to two years longer A medicines regulator has raised the alarm over a likely decision to pull out of the European Medicines Agency (EMA), as well as the EU itself. ealth Secretary Jeremy Hunt dropped the bombshell , when he said he expected the UK would quit the EMA – because it is subject to rulings by the European Court of Justice. Getty Images Brexit Concerns London to lose status as 'gateway to Europe' for banks One of Germany’s top banking regulators has warned that London could lose its status as “gateway to Europe” for the banking sector after Britain quits the European trading bloc. Andreas Dombret, who is an executive board member for the Bundesbank—Germany’s central bank—told a private meeting of German businesses and banks earlier this week in Frankfurt that even if banking rules were “equivalent” between the UK and the rest of the EU, that was still “miles away from [Britain having] access to the single market”, the BBC reports. Jason Hawkes Brexit Concerns Exodus The number of financial sector professionals in Britain and continental Europe looking for jobs in Ireland rocketed in the months after the UK voted to leave the European Union Shutterstock Brexit Concerns Brexit is making FTSE 100 executives richer Pay packages of many FTSE 100 chief executive officers are partly tied to how well share prices are doing rather than the CEO’s performance -- and some stocks are soaring. ritish equities got a boost since the June vote because the likes of Rio Tinto, Smiths Group and WPP generate most sales abroad and earn a fortune when they convert these revenues back into the weakened pound. Sterling’s fall also made UK stocks more affordable for overseas investors. Rex Brexit Concerns Theresa May: UK to leave single market Theresa May has said the UK "cannot possibly" remain within the European single market, as staying in it would mean "not leaving the EU at all". Getty Brexit Concerns Lead campaigner Gina Miller and her team outside the High Court Getty Brexit Concerns Raymond McCord holds up his newly issued Irish passport alongside his British passport outside the High Court in Belfast following a judges dismissal of the UK's first legal challenges to Brexit PA wire Brexit Concerns SDLP leader Colum Eastwood leaving the High Court in Belfast following a judges dismissal of the UK's first legal challenges to Brexit PA wire Brexit Concerns Migrants with luggage walk past a graffiti on a wall as they leave the 'Jungle' migrant camp, as part of a major three-day operation planned to clear the camp in Calais Getty Brexit Concerns Migrants leave messages on their tents in the Jungle migrant camp Getty Brexit Concerns The Adventist Development and Relief Agency (Adra) which distributes approximately 700 meals daily in the northern Paris camp states that it is noticing a spike in new migrant arrivals this week, potentially linked the the Calais 'jungle' camp closure - with around 1000 meals distributed today EPA Brexit Concerns Migrant workers pick apples at Stocks Farm in Suckley, Britain Reuters Brexit Concerns Many farmers across the country are voicing concerns that Brexit could be a dangerous step into the unknown for the farming industry Getty Brexit Concerns Bank of England governor Mark Carney who said the long-term outlook for the UK economy is positive, but growth was slowing in the wake of the Brexit vote PA Brexit Concerns The Dow Jones industrial average closed down over 600 points on the news with markets around the globe pluninging Getty Brexit Concerns Immigration officers deal with each member of the public seeking entry into the United Kingdom but on average, 10 a day are refused entry at this London airport and between 2008 and 2009, 33,100 people were detained at the airport for mainly passport irregularities Getty Brexit Concerns A number of global investment giants have threatened to move their European operations out of London if Brexit proves to have a negative impact on their businesses Getty Brexit Concerns Following the possibility of a Brexit the UK would be released from its renewable energy targets under the EU Renewable Energy Directive and from EU state aid restrictions, potentially giving the government more freedom both in the design and phasing out of renewable energy support regimes Getty Brexit Concerns A woman looking at a chart showing the drop in the pound (Sterling) against the US Dollar in London after Britain voted to leave the EU Getty Brexit Concerns Young protesters outside the Houses of Parliament in Westminster, to protest against the United Kingdom's decision to leave the EU following the referendum Getty Brexit Concerns Applications from Northern Ireland citizens for Irish Passports has soared to a record high after the UK Voted in favour of Leaving the EU Getty Brexit Concerns NFU Vice President Minette Batters with Secretary of State, Andrea Leadsome at the National Farmers Union (NFU) took machinery, produce, farmers and staff to Westminster to encourage Members of Parliament to back British farming, post Brexit Getty Brexit Concerns The latest reports released by the UK Cabinet Office warn that expats would lose a range of specific rights to live, to work and to access pensions, healthcare and public services. The same reports added that UK citizens abroad would not be able to assume that these rights will be guaranteed in the future Getty Brexit Concerns A British resident living in Spain asks questions during an informative Brexit talk by the "Brexpats in Spain" group, about Spanish legal issues to become Spanish citizens, at the town hall in Benalmadena, Spain Reuters Brexit Concerns The collapse of Great Britain appears to have been greatly exaggerated given the late summer crowds visiting city museums, hotels, and other important tourist attractions Getty Brexit Concerns The U.K. should maintain European Union regulations covering everything from working hours to chemicals until after the government sets out its plans for Brexit, said British manufacturers anxious to avoid a policy vacuum and safeguard access to their biggest export market Getty

Speaking during a joint news conference with Italian Prime Minister Paolo Gentiloni, Ms Merkel said: “The speech made by British Prime Minister Theresa May has given us a clear impression of how Great Britain wants to proceed.

“The main thing is that Europe does not let itself be divided and we will make sure of that via very intensive dialogue.”

Mr Gentiloni said the EU was “ready to discuss the issue with the correct approach, which is in solidarity and friendship with the UK”.

A spokesman for the German finance ministry said London’s vision for implementing Brexit could prove to be “pretty complicated” given that Britain would have no “EU passport” to conduct financial transactions once it left the bloc.

Swedish Prime Minister Stefan Lofven said he feared the two-year negotiation period, which will begin when Britain launches Article 50 of the EU’s Lisbon Treaty, may not be enough.

“Everybody needs to think through the timetable for these negotiations because in practice we have actually not more than perhaps one-and-a-half years, perhaps a little bit more,” he told reporters in Davos.

“Autumn 2018, that is a very, very short time for these complex negotiations, so I think that the UK ... is a bit optimistic (on the) timetable.”

While European Commission President Jean-Claude Juncker said EU negotiators were “not in a hostile mood” toward Britain, Slovakia’s Prime Minister said the EU had to ensure London did not win a deal that would be to the detriment of the remaining 27 members.

“I am convinced that in no case will a future agreement be more favourable for Great Britain than current membership in the EU,” Robert Fico told a news conference.