Merkel tells Johnson EU would be prepared for no-deal Brexit

Demostrators hold European flags and banners in front of the Chancellery prior to the visit of British Prime Minister Boris Johnson

Demostrators hold European flags and banners in front of the Chancellery prior to the visit of British Prime Minister Boris Johnson

Merkel suggested Britain and the European Union could find a solution to the sticking point of the Irish backstop in the next 30 days, a possible signal she was willing to compromise with Johnson.

Just an hour after Ms Merkel spoke, French President Emmanuel Macron said the demands made by Mr Johnson for a renegotiation of the divorce deal, including the removal of the Irish backstop, were not workable as they now stood.

However, the British pound, sensitive to the prospect of a "no-deal" exit, jumped more than half a cent after Merkel said she had not set Johnson a 30-day deadline to propose a solution to the border issue, and that it could be achieved by October 31.

Echoing comments by German Chancellor Angela Merkel, Macron supported allowing another month to find a solution to the vexed issue of the Irish border which has bedevilled negotiations since 2017.

But just an hour after that meeting, Macron underscored the EU's position that there would be no reopening of the Withdrawal Agreement agreed between Johnson's predecessor Theresa May and the bloc.

"The markets are biased towards the optimistic view because everyone still thinks that given the negative consequences of no-deal Brexit for both sides a solution will be found", said Esther Maria Reichelt, an FX strategist at Commerzbank.

A British government spokesman, however, has insisted that the United Kingdom will never undermine the Northern Irish peace accord, saying, "Under no circumstances will we create a hard border in Northern Ireland or impose physical checks or infrastructure of any kind at the Northern Irish border".

He said: "A great deal of work has already been done to ensure that the transition on October 31 is as smooth as it possibly can be and so there are already agreements on aviation, on financial services, many other sectors".

Johnson is strongly against having any checkpoints on that border and does not want Northern Ireland to be treated differently than the rest of the UK.

"We are preparing for any scenario, including leave without a deal", Macron said.

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But many Brexit watchers saw Merkel's remarks as fitting a pattern in which Merkel has often been more conciliatory in public about Brexit than Macron, whose abrasive remarks have angered London in the past.

But the window offered by France and Germany to Johnson to find a solution led to renewed optimism in financial markets, where the pound rose by as much as 1.0 percent against the euro and dollar.

The two gave a brief joint press conference before a working lunch at the Elysées Palace.

"(We) might be able to find (a solution) in the next 30 days, why not?"

"And even if it were a strategic choice it would be at the cost of a historic vassalisation of Britain".

But for three years the European Union has been unpersuaded that any technical solutions now available would eliminate the need for a backstop to be in the withdrawal agreement.

Mr Macron however ruled out major compromises as he met Johnson in Paris.

Johnson admitted the response to his letter had been "a bit negative" but a deal was still possible.

During his speech, the PM reminded his colleague across the Channel that Britain and France have been frequent collaborators - the French build London buses, while French trains run on rail tracks made in steel forges in Scunthorpe, he told Mr Macron.

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