Germany will continue to push to seal a new partnership agreement with Britain by the end of the year, but the European Union should also prepare for an abrupt split from 2021, chancellor Angela Merkel said on Wednesday.
Britain left the EU in January and is currently in a standstill transition period with the bloc to give the two sides time to fix a new relationship in everything from trade to security.
"Progress in negotiations thus far has been slim, to put it diplomatically," Merkel told the European Parliament as Germany assumed the EU's rotating presidency for the rest of the year.
"We have agreed with the UK to accelerate the pace of the talks ... I will continue to push for a good solution, but we should also prepare for a possibility of a no-deal scenario."
'Level Playing Field'
Britain has so far rejected EU pressure to commit to close ties in areas ranging from fisheries to harmonising competition standards - a 'level playing field' - since prime minister Boris Johnson - a key campaigner for Brexit - wants only a narrower trade deal.
British and EU officials meet in London this week for more talks. The bloc's chief negotiator, Michel Barnier, has said the 27 members of the union will not seek a deal at any price.
Barnier had dinner with Johnson in London on Tuesday evening. On Wednesday, he said, "We are working hard for a fair agreement with the United Kingdom, including on fisheries and a 'level playing field'."
The two elements are among the points that have blocked an agreement so far in talks between the world's largest trading bloc and its fifth-biggest economy. Should no deal emerge, major trade and travel disruptions would ensue.
Johnson said in a call with Merkel on Tuesday evening that Britain would leave the transition period at the end of the year "on Australia terms" if no better deal was agreed.
Australia does not have a comprehensive trade agreement with the EU. Much of EU-Australia trade follows default World Trade Organisation rules, though specific agreements are in place for certain goods.