By Tom Sims
FRANKFURT (Reuters) - Germany is doing all it can to ensure the European Union and Britain reach a divorce deal, Chancellor Angela Merkel said on Tuesday, warning that success was not guaranteed.
Addressing a financial conference in Frankfurt, the German leader said an extensive trade deal between the two sides could form the foundation of their future relationship and that clear divorce terms must be reach this autumn.
"We don't want the discussions to break down," Merkel said. "But we also can't fully rule that out because we still have no result. But I promise you that we will use all our force and creativity to make sure a deal happens."
Britain is due to leave the EU on March 29 next year after a referendum in June 2016 but has yet to secure an agreement to define future relations with Brussels and manage the economic impact of ending over four decades of integration with the world's largest trading bloc.
British Prime Minister Theresa May agreed with her ministers on Tuesday to step up contact with members of the bloc to try to get a Brexit deal as talks to leave the bloc enter a "crucial and intense phase".
"We must in autumn finalise the question of divorce and set out in a the clearest way possible how the future relations will look like," Merkel said. "We assume that Britain will be a third country and a very intensive trade deal would be the basis of our future relations."
Echoing May's oft-repeated line "Brexit means Brexit", Merkel said "exit means exit", including from the Europol police agency, and that Britain cannot expect to have similar rights as the remaining 27 members of the EU after it leaves the bloc.
Europol wants to continue sharing information with Britain, which is one of world's leading crime-fighting and intelligence powers.
Nonetheless, Merkel said she expected the EU27 to continue to have close relations with Britain because both faces similar security challenges as the United States shifts it focus from Europe and the Middle East to the Pacific region.
Brussels has dismissed key elements of May's Brexit strategy, formulated in July at her Chequers country retreat, and it has been widely criticised by both those who want a more radical break from the EU and those who want even closer ties.
Brexit minister Dominic Raab told Britain's parliament on Tuesday that an exit deal was within reach, although lawmakers from all sides told him the current negotiating plan had little hope of winning their approval.
A German newspaper reported on Tuesday that Germany's preparations for Brexit included hiring of new customs staff and that all possible outcomes were being considered.
"The government is preparing for all possibilities related to (Britain's) exit," the Stuttgarter Zeitung quoted a foreign ministry official as saying in remarks to be published on Wednesday. "This includes eventual legislative measures but also the hiring and training of additional staff, such in customs."
(Writing by Joseph Nasr; Editing by Alison Williams)