U.K. Brexit Plan Wins Guarded Praise and Warnings From Germany

(Bloomberg) -- German industry groups praised Prime Minister Theresa May’s plan to maintain strong U.K. links with the European Union, while members of Chancellor Angela Merkel’s governing coalition cautioned there’s no breakthrough yet.

“That Prime Minister May got her way against the Brexit hardliners is reason for hope,” Florian Hahn, a lawmaker with Merkel’s Christian Democratic-led bloc, said in a statement on Monday. “But it’s also clear that the EU internal market is indivisible and there can’t be any cherry-picking.”

Comments from Germany combined praise of the plan that emerged from May’s cabinet meeting on Friday with calls to avoid further delays after Brexit Secretary David Davis quit on Sunday night saying he opposed her stance. May quickly named a replacement and insisted she’ll press ahead with her vision of the divorce from the EU.

The U.K. cabinet accord is a step forward “after weeks of feuding and being occupied with themselves,” Achim Post, a deputy parliamentary group leader for the Social Democrats, Merkel’s coalition partner, said in a statement. He predicted more wrenching debate within May’s government.

“We’re still far removed from a breakthrough in talks with the EU,” Post said. “The British government had best get used to the idea of holding more retreats at Chequers.”

Industry, Banking

German business groups said May was heeding warnings by British industry. The Federation of German Industries, or BDI, called on May to come ahead with details of her plan, regardless of Davis’s resignation.

“There can be no delays in the negotiating process,” according to a BDI statement.

Germany’s Mechanical Engineering Industry Association, or VDMA, welcomed a U.K. pledge to adhere to EU regulations on industrial products under May’s plan, which keeps the U.K. bound to EU rules on goods and food after Brexit.

The Association of German Banks said the plan can “resolve a number of problems,” while making it clear that the U.K. “will be a third country” for EU financial services after the transition period ends.

Merkel’s government sees May’s compromise arrangement for customs after Brexit as unworkable, a person familiar with the German stance told Bloomberg News last week.

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