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Finance Minister Olaf Scholz spoke out as negotiations shuddered to a halt amid acrimony after Boris Johnson announced new legislation which overrides aspects of the EU withdrawal agreements including the key Northern Ireland Protocol. Mr Johnson’s UK Internal Market Bill has stoked fears in Brussels that Britain will bluntly sever ties with Europe when the transition period ends on December 31.
An unregulated no deal situation would have very significant consequences for the British economy
But Mr Scholz warned such a move would leave the UK carrying a much heavier burden than its EU counterparts.
Speaking after a meeting of EU finance ministers in Berlin, he said: “My assessment is that an unregulated no deal situation would have very significant consequences for the British economy.
“Europe would be able to deal with it and these would not be particularly difficult consequences after the preparations we have already made.”
The EU has warned Mr Johnson the controversial legislation has “seriously damaged trust” between the two sides and threatened to take the UK to court if the Bill was not withdrawn by the end of September.
Paolo Gentiloni, the EU’s economics affairs commissioner, said it was up to Britain to “re-establish trust” with the bloc.
The former Italian prime minister said: “And in any case we are prepared to deal with extraordinary negative outcome of this discussion.”
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Mr Johnson had earlier warned Tory MPs Brussels could “carve up our country” unless his Bill was passed.
The Prime Minister’s bid to win the backing of a growing group of rebellious backbenchers was joined by Cabinet Office Minister Michael Gove who warned the legislation was essential to protect the “integrity” of the UK by preventing a trade border in the Irish Sea.
Mr Johnson spoke to around 250 MPs to try to drum up support for the Bill, and warned them against a return to the “miserable, squabbling days of last autumn” over Brexit.
And, in an incendiary article for The Telegraph, Mr Johnson said Brussels was threatening to use an “extreme interpretation” of the Northern Ireland Protocol to impose “a full-scale trade border down the Irish Sea” that could stop the transport of food from Britain to Northern Ireland.
Both Ireland and the EU have warned that Mr Johnson’s plans pose a serious risk to the peace process rather than protecting the Good Friday Agreement.
But he argued it was “crucial for peace and for the Union itself” and said voting the Bill down would reduce the chances of a trade deal with the EU, which is hanging in the balance.
He asked MPs to help him “remove this danger to the very fabric” of the UK by taking away “the theoretical power to carve up our country”.
Mr Gove said: “We’re doing our part – generously – to help protect the EU’s own single market.
“But we’re clear that what we can’t have, even as we’re doing all that, is the EU disrupting and putting at threat the integrity of the United Kingdom.”
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Mr Gove conceded “we are reaching a crunch moment”.
But he insisted: “We have got the support of our own MPs”.
Tory rebels have suggested their opposition to the Bill was only hardened by Mr Johnson’s conference call with backbenchers and believed support was growing for their amendment.
Former prime ministers Sir John Major and Tony Blair have also waded into the row, urging MPs to reject the legislation which the claim imperils the Irish peace process, trade negotiations and the UK’s integrity.
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