Failure to reach a post-Brexit trade deal would reflect badly on both the UK and European Union, Angela Merkel warned as talks continued to thrash out a late agreement.
The German leader said an agreement is in the interests of all parties in the talks, but warned that it could not come “at any price”.
Her comments came after Ireland’s foreign minister warned that the collapse of talks would have “costly and disruptive” consequences.
Talks between the UK and European Union are continuing in London with time running out to strike a deal before the current transitional trading arrangements expire at the end of the year.
The thorny issues of fishing rights and the “level playing field” aimed at preventing unfair competition on standards and state subsidies remain the major obstacles to an agreement.
Mrs Merkel told MEPs: “I hope that we will still come to a contractual solution.
“We, Britain and the member states of the European Union, are countries that are based on the same values, and it would not be a good example for the world if we didn’t in the end manage to craft an agreement.”