Wolfgang Münchau said the likelihood of the UK leaving the European Union without a deal “has risen dramatically in recent months” and those in Germany urging the bloc maintain its tough negotiating stance are “turkeys voting for Christmas”.
The prominent financial commentator warned Germany’s annual £44.5billion (€50billion) trade surplus with Britain means a hard Brexit would be “disastrous” for the EU powerhouse.
And he said Angela Merkel’s government should stop opposing Britain’s exit for political reasons and focus ensuring a deal on trade is struck to protect the German economy.
Writing in German newspaper Handelsblatt, he said: “A hard Brexit would not only be a first-degree disaster for German industry.
“Moreover, a hard Brexit would have more serious consequences for the German economy than a trade war with the US.
“An agreement that guarantees the free movement of goods is not as good as a full membership, but much better than no deal.
“It is therefore irrational, from the perspective of the German economy, to support a policy that increases the risk of a hard Brexit.”
Mr Münchau identified the Irish border issue as the biggest obstacle to securing a Brexit deal.
The EU has proposed a contingency which would kick in to prevent a hard border if no other deal is reached.
The so-called ‘backstop’ plan would see Northern Ireland stay in the customs union and most of the single market, removing the need for customs checks between Northern Ireland and the Irish Republic.
But Theresa May has already rejected this proposal, arguing it would effectively create a border in the Irish Sea and risk the break-up of the United Kingdom.
The Prime Minister is instead pushing for a ‘facilitated customs agreement’ which would see the whole of the UK largely aligned with the EU on customs rules and tariff in a bid to keep trade as frictionless as possible.
Mrs May’s plans have been met with a frosty reception from Brussels which has warned the proposals could threaten the integrity of the single market.
But Mr Münchau said the best Brexit outcome Germany can hope for is a deal based on Theresa May’s Chequers proposals which would mitigate damage on the trade of goods.
He said: “The proposal is not so bad from the point of view of the German industry. The duty-free movement of goods is maintained.
“The argument that this would destroy the single market is a massive distortion.
“The single market, its rules and its arbitration mechanisms remain in force.
“Of the Brexit positions in the UK, Prime Minister May’s opinion is the best from a German perspective – or at least good enough.
“She wants to protect the goods trade, and wants close cooperation with the EU for security policy.
“Anyone who continues to argue for a tough stance on the British government in view of the current political situation in the UK either does not have the economic interests of Germany in mind or behaves like turkeys who express themselves without full information, but with a great enthusiasm for Christmas.”
Additional reporting by Monkia Pallenberg.