Merkel says there is 'still a chance' for Brexit accord

The European Union and Britain could still reach a Brexit trade agreement but the bloc's 27 remaining members are prepared to live with no deal if necessary, German Chancellor Angela Merkel said on Wednesday.

A wrestle over so-called "level playing field" rules, which would prevent Britain undercutting EU standards on things like labour and environmental standards, is the big issue still to be resolved, Merkel told German lawmakers.

Berlin has full confidence in the European Commission to pursue the Brexit negotiations, Merkel added ahead of talks between British Prime Minister Boris Johnson and Commission President Ursula von der Leyen in Brussels later on Wednesday.

"There is still the chance of an agreement ... We are continuing to work on it, but we are also prepared for conditions which we cannot accept," Merkel told the Bundestag lower house of parliament.

"One thing is clear: the integrity of the internal market must be preserved," she added.

"We must have a level playing field, not just for today but for tomorrow and beyond ... Otherwise, unfair competition conditions arise to which we cannot subject our companies," she said. "This is the really big question".