The UK hopes to reach a “broad outline of a political agreement” with the EU this summer but have been warned that it will have to “live with the consequences of less close ties with Europe”.

The warning came from German Chancellor Angela Merkel as the negotiations restart this week, with the UK’s chief negotiator David Frost arriving in Brussels for intensive talks.

In an interview with the Guardian she said the “relations will be less close” between the UK and EU after the transition if the UK continues to pursue divergence on environmental rules, social standards and the labour market.

Tone shift

Yet Chancellor Merkel – whose country takes over the rotating presidency of the EU council next week – has long been viewed by the UK government and media as one of the strongest advocates for a deal and close ties between the UK and EU post-Brexit.

Merkel’s remarks suggest Germany is preparing for a less comprehensive deal than it had previously hoped for and potentially a no deal outcome, according to the Guardian.

“We need to let go of the idea that it is for us to define what Britain should want,” she said. “That is for Britain to define – and we, the EU27, will respond appropriately.”

State-aid plans

The two sides remain apart on level playing field rules, fisheries, security arrangements and governance.

The FT reports that the EU continues to urge the UK to share its plans for state-aid after the transition, having received “no indication of the future framework it plans to put in place.”

EU chief negotiator Michel Barnier said the bloc will not agree to a situation in which the UK could use its own subsidies in a way that would harm EU economies.

Deal by the autumn

The UK hopes to reach at least a political agreement this summer, with the EU believing a deal will need to be agreed by late October so that it can be ratified before the end of the transition period.

“The faster we can reach an agreement, the better — and there’s no clear reason why the broad outline of a political agreement can’t be reached in the summer,” said a Number 10 source in the Telegraph.

The UK government wants to at least agree to the bare bones of a deal over the summer so that it can offer businesses clarity well before the close of the year, when the transition period ends.