Chancellor Angela Merkel has warned Germany’s business leaders to fall into line behind Berlin on Brexit, saying that allowing Britain a bespoke trade pass to the EU risks bringing down the trading bloc.

As leading Berlin government officials rubbished Mrs May’s speech as “cherry-picking”, even Dr Merkel struggled to strike a more conciliatory note. She urged business leaders to “act and negotiate together” with her administration in talks with Germany’s third largest export partner.

Her message was clear: the principle of European unity, in particular the freedom of movement, was more valuable than the €89 billion worth of goods and services Germany sells to Britain annually.

“The single market will soon be endangered if it emerges that you can get full access even by picking certain things out,” said Dr Merkel ahead of Ms May’s heavily-leaked address. If Britain refuses to honour EU’s core freedoms, she said, “then we have to lead talks with Britain that do not include full access to the EU single market”.

Her Bundestag chief whip, Volker Kauder, echoed the Christian Democrat (CDU) leader, saying if Britain wanted an abrupt end to EU relations “we will negotiate accordingly”.

Sharper tone

“It’s important now that we move to an orderly process,” said Sigmar Gabriel, SPD leader and economics minister.

Germany’s chief diplomat, foreign minister Frank-Walter Steinmeier, struggled to strike a diplomatic note, welcoming a speech that “finally brought a bit more clarity”.

Behind the scenes, however, German officials were underwhelmed by Ms May’s address, viewing it as a compilation of previously known positions and recent leaks.

No one in Germany is prepared to negotiate with Britain until it triggers its exit in March, and even then hopes are low that any constructive deal can be struck in the following two years.

Among German economists and analysts, a tone of constructive scepticism prevailed. Many suggested Ms May had simply stated the obvious in the speech, taking off the table the non-viable Brexit option.

Prof Sebastian Dullien, an economist at Berlin’s University of Applied Sciences, predicted tricky talks ahead as negotiators struggled to square a possible bilateral free trade deal with the necessary trade restrictions should a post-Brexit Britain exit the customs union.

“Even if you let British goods into the EU market without tariffs, you need to make sure the goods were made in Britain. The reality is this will disrupt supply chains between Britain and the EU, particularly for the highly-integrated car industry, where parts cross borders several times.”

Obsession

He urged EU leaders to agree a “comprehensive” free-trade deal with Britain, including a multi-year transitional period where current rules would continue.

European Council president Donald Tusk said the speech was “at least more realistic”. Responding on Twitter, he said that the 27 other EU states remained united and ready to negotiate. “Sad process, surrealistic times, but at least more realistic announcement on Brexit,” wrote Mr Tusk, who will oversee the negotiations on behalf of the other member states.

Guy Verhofstadt, the European Parliament’s point person for Brexit, said it was an “illusion” to think that Britain could enjoy the advantages of the single market without accepting the obligations that come with it. “We shall never accept a situation in which it is better to be outside the European Union,” he said.