Germany demands EU COMPROMISE: Hard Brexit risk because of ‘stubborn’ Brussels, warn banks

Katrin Löhken, an economics analyst at the private Sal Oppenheim bank, warned the European Union had to compromise in its dealings with Britain.

She warned each new round of negotiations which ends without a result increases the risk of a Hard Brexit.

She said: “The Brexit negotiations are currently making little headway due to the European Union’s stubbornness. 

“The risk of a hard Brexit increases with every new round of negotiations.

“One reason is that the EU insists on noticeable progress in negotiations as a prerequisite for discussions on the trade agreement.”

Her comments came after German MEP Hans-Olaf Henkel savaged the EU over its handling of Brexit talks and said the bloc should break the “deadlock” and look for a different kind of deal.

The MEP and former business chief said Brussels had “behaved in an absurd and arrogant manner” throughout Brexit negotiations. 

He highlighted the deadlock in Brexit negotiations and said: “We have absolutely no illusions. 

“Berlin will say ‘No this is the responsibility of Monsieur Barnier in Brussels’. Brussels will say ‘Oh look, it is now up to Britain to make the next move’. 

“However, I think the situation is so obviously wrong for both that it is necessary to try to change the situation.”

Ms Löhken said she expected to see “substantial progress” by the end of the year.

She said: “The EU must not be underestimated as a negotiating partner. They have experience in negotiating free trade agreements.

“We expect to agree to a transitional period of two years, during which most of the EU legislation will apply, because the trade agreement will probably not be completed by the end of the Brexit period.”

The economist said she expected a post-Brexit trade agreement will be “more than the CETA agreement with Canada, but less than the common EU single market”.