Speaking at the annual conference of BDI, the Federation of German Industries, Merkel said that the plan, strongly supported by new French president Emmanuel Macron, should be examined.

‘Open markets and free, fair, sustainable and inclusive trade is a key focus of our G20 presidency. Ultimately, it’s for the benefit of everybody,’ she told the audience.

Macron is calling for a single fiscal budget for the 19 EU eurozone countries, supported by a pan-EU finance minister.

The eurozone consists of Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia and Spain. Even if the UK were to have stayed in the EU, together with Denmark, both countries have a derogation to not have to join the single currency.

In line with the moves for closer co-operation, integration of the corporate tax base across the EU has progressed in recent months after stalling for years. Plans for the Common Consolidated Corporate Tax Base (CCCTB) were resurrected in 2016, as part of a broader set of tax reforms, although the UK and a number of member states are strongly against the proposals for a single tax base for the EU. The CCCTB would create a cross-border tax basis for corporations with a single set of rules across the EU.  

The long-term aim of the CCCTB and pro-EU member states is that national tax administrations would file one return for all their EU activities.

A double taxation dispute resolution system for the EU was agreed in May, with Maltese finance minister Edward Scicluna saying: ‘This directive is an important part of our plan for strengthening tax certainty and improving the business environment in Europe.’

Talk of closer integration follows soon after UK Chancellor Philip Hammond and Bank of England governor Mark Carney gave speeches that spoke of the critical nature of maintaining strong trade with the EU, and concerns from the governor that Brexit risked damaging the UK economy.

Hammond said that ‘more trade’ would dampen UK austerity concerns, while Carney suggested ecommerce platforms that would free up SMEs to do business abroad.

Report by Kevin Reed, additional reporting by Sara White