Angela Merkel has said that Brexit should serve as a “wake-up call” for the EU, warning that Britain will become a major economic competitor.
With little over a fortnight to go until the UK leaves the EU, the German Chancellor has told her European colleagues that the bloc needs to do more to become competitive in the world market.
Speaking to the Financial Times, Mrs Merkel said the EU had to become “attractive, innovative, creative, a good place for research and education”.
She added: “Competition can then be very productive.”
Mrs Merkel said last year that Britain would emerge as a “potential competitor” to the EU, alongside China and the United States.
Berlin fear that a post-Brexit Britain will “diverge from EU rules on goods, workers’ rights, taxes and environmental standards”, that “could create a serious economic competitor on its doorstep”.
Britain is set to leave the EU on 31 January, kicking off a transition period that will last 11 months, allowing the UK government to thrash out trade deals with Brussels before the 31 December deadline.
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Irish premier Leo Varadkar has said that there has to be a level playing field in the Brexit negotiations to ensure the single market and customs union are "not diluted”.
The Taoiseach said there must be a common minimum standard so the United Kingdom does not attempt to "undercut" the EU over its labour and environmental standards.
Mr Varadkar said: "The next step is negotiating a free trade agreement with the UK. When it comes to Brexit it is only half-time, and the next step is to negotiate a free trade agreement between the UK and the EU.
"There also has to be a level playing field so that the single market and the customs union are not diluted.
"We must have common minimum standards so that the UK doesn't attempt in any way to undercut the EU when it comes to labour and environmental standards.”
Boris Johnson has insisted there will be no extension to the transition deadline at the end of 2020, meaning a no-deal scenario is still a possibility.