Germany expects a No Deal Brexit and is not prepared to renegotiate the withdrawal agreement, according to leaked details of an internal briefing paper for Angela Merkel’s government.
The leaked paper is the first evidence that Germany may be preparing to let Britain walk away with No Deal rather than back down to Boris Johnson’s demand to drop the Irish backstop.
The paper was prepared by civil servants for the German finance minister, Olaf Scholz, ahead of face-to-face talks with the chancellor of the exchequer, Sajid Javid, in Berlin on Friday.
In public, Mr Scholz has said Germany will do everything it can to secure a deal with the UK. But according to details leaked to the usually reliable Handelsblatt newspaper, the briefing paper calls for the European Union to stick to its previous line of refusing to renegotiate the withdrawal agreement.
It warns that there is now a “high probability” of a No Deal Brexit on October 31, but says the EU must not "lose its nerve". Preparations by Germany and the rest of the EU-27 to manage the impact of No Deal are “largely complete”, and the European Commission is not planning any further emergency measures, it says.
The paper says it is “currently unforeseeable that Prime Minister Johnson will change his tough negotiating position” and predicts that he may use next weekend’s G7 summit in Biarritz for a “big moment” to announce success or failure in negotiations.
“Against this background, it is important from the EU perspective to stick to the previous line” of refusing to renegotiate the withdrawal agreement, it says, adding that even if the EU were to agree to drop the Irish backstop, it is not clear that Mr Johnson would be able to win approval for a revised withdrawal agreement in parliament.
The UK has made repeated attempts to split the EU side, and “the EU-27’s unity in adhering to the negotiated exit agreement” has been “decisive”, the paper says.
Germany has already passed more than 50 laws and measures to deal with the impact of a No Deal Brexit, and the paper provides details of arrangements in the finance ministry’s area of tax and banking.
It cites a transitional agreement between the Financial Conduct Authority (FCA) and BaFin, the German financial regulator on cross-border financial services, and says German customes authorities are prepared for the increased workload expected under No Deal.