BERLIN (REUTERS) – The European Union and Britain have made “very limited” progress in negotiations about their future relationship, German Chancellor Angela Merkel said on Wednesday (July 1), adding there was still a possibility that no deal would be agreed.

“Progress in talks is, to put it cautiously, very limited,”Merkel told parliament during a Q&A session.

Germany took over the six-month rotating presidency of the EU on Wednesday.

“We have agreed with Britain to speed up the talks in order to seal a deal in the autumn that must be ratified by the end of the year,” she said.

But Germany and the EU “must be prepared … for the possibility that a deal doesn’t materialise”.

Britain left the bloc on Jan 31. A transition period, during which Britain remains in the EU single market and customs union, expires on Dec 31 and pressure is mounting to agree a free trade deal before then.

With the two sides still far apart, a round of “intensified negotiations” is scheduled for this week.

The British prime minister’s spokesman said a deal was still possible but Britain was prepared for either scenario.

“We believe that there is a free trade agreement to be reached but we have also been very clear that we will be prepared for either eventuality at the end of the year, whether that be a free trade agreement or whether that be having a trading relationship based on the same terms that Australia currently has,” the spokesman told reporters.

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