Merkel: Failure of the Brexit negotiations "not completely excluded"

United Kingdom and Gibraltar European Union membership referendum

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In view of the Brexit, the Federal Government is intensifying its commitment to the German financial center. "We will do everything we can to support Hesse, to enable attractive conditions for Germany as a financial center," said German Chancellor Angela Merkel (CDU) on Tuesday evening at a Deutsche Börse event in Frankfurt.

Among other things, progress has been made in the easing of dismissal protection for top earners in banks, which is being sought by the Union and the SPD in the coalition agreement. "Work is already underway on this regulation," said Merkel. The UK's exit from the EU is forcing banks in the London financial center to reorientate themselves. Hopes for more jobs, along with other cities in Europe, also makes the Frankfurt financial center. The strict German dismissal protection, however, is considered a hurdle.

Merkel also sees potential for Frankfurt in euro clearing. At the moment, the billion-dollar settlement of euro-securities trading transactions is predominantly in London. If Britain leaves the EU, local overseers would have little control over this important market. "Politically, I can explain to everyone that euro clearing is taking place in the eurozone, and then, of course, Frankfurt is the outstanding place," said Merkel.

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Merkel with Hesse's Prime Minister Bouffier (left) and Deutsche Börse CEO Weimer

At the end of March 2019, Britain is leaving the European Union. London and Brussels are currently wrestling with a withdrawal agreement, but negotiations have recently stalled. The original intention was to reach an agreement by the time of the EU Heads of State and Government meeting in mid-October so that the parliaments of both sides had sufficient time to ratify the treaty.

"We have the goal to reach an agreement with Great Britain," said Merkel now in Frankfurt. "It is important, of course, that this goal be achieved on the condition that a non-EU member can not have the same rights and obligations as a member of the European Union."

Merkel also said that they did not want these negotiations to fail. "But we can not completely exclude it, we will work with all our strength and creativity on a result." (You can read more about how banks are preparing for a chaotic Brexit here.)