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The German Chancellor said the UK could join China and the USA on a list of the bloc’s main trade rivals in the coming years. During a joint press conference with France’s Emmanuel Macron in Paris, she warned the UK would become a “potential competitor” with the EU in the global marketplace “along with China and the United States”. “Europe needs to show what it is made of,” she added ahead of a dinner with the French President last night.

Mrs Merkel’s warning comes after EU capitals were told by Michel Barnier that it would be “very difficult” to strike a Brexit deal with Britain ahead of Thursday’s European Council summit. Until now, the German leader has treated Britain as a friendly neighbour and expected to maintain close trading ties after Brexit. But a recent telephone spat between her and Boris Johnson flared tempers between Berlin and London as divorce talks reach a critical stage. Her fears have emerged since the Prime Minister attempted to scrap the so-called "level playing field" provisions established by his predecessor Theresa May.

Angela Merkel has warned post-Brexit Britain could be a trade threat to the EU

She said UK could join the US and China on list of Brussels trade rivals

Mr Johnson wants to be able to able to undercut the EU but diverging from the bloc's rules and regulations. Brexit Party MEP Rupert Lowe said: "Merkel warning the UK is a 'potential competitor' for the EU in the global markets. "This is their fear, they've had us under their heel for decades. "They need their 'level playing field' to keep us shackled. EU central planners stand no chance against a Singapore-style UK!" The Brussels negotiator told senior EU diplomats last that Mr Johnson would have to offer more concessions if he wants an agreement by the end of the week.

He is understood to have told David Frost, Britain’s chief negotiator, that the EU is prepared to support a new plan in principle even if a legal text could not be finalised in time for the summit – provided the Prime Minister gave more ground on customs arrangements for Northern Ireland. Brussels is concerned with the complexity of the offer tabled by Mr Frost during a round of intense weekend negotiations. Under the plan, goods entering Northern Ireland from Great Britain would be charged differing trade tariffs depending on whether they entered the Irish republic. Mr Barnier warned diplomats that the proposals were “untested” and created risks for the single market. MUST READ: Pound to euro exchange rate: GBP rockets to best levels since May

The two EU leaders met in Paris on Sunday ahead of this week's European Council summit

One European source said: "It will be difficult to have a legal text for the European Council but still not impossible if there's some movement. "The main problem remains the customs arrangements.The UK's proposals are untested and create risk for the single market. "The UK's ideas is to make a distinction between goods for UK and Northern Ireland, and for EU. That creates two customs areas on the island of Ireland." UK and EU officials will continue negotiating the plans today in the hope of reaching a breakthrough. DON'T MISS

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But Brussels sources have played down chances of a deal ahead of this week’s European leaders summit. Simon Coveney, Ireland’s deputy prime minister, this morning said there is still time to strike a deal ahead of October 31. He told reporters in Luxembourg: “I think on Brexit the less we say the better. We need to give time and space to Michel Barnier and his task force and the British negotiating team.

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