Germany's finance minister warned the UK on Thursday (19 January 2017) against becoming a low-tax haven should Brexit talks with the European Union fail to strike a deal. Wolfgang Schäuble said that the G20 group of the world's richest countries, which currently includes the UK, has previously ruled against taking such steps, and he would remind British Prime Minister Theresa May of this.

He said: "I have heard Prime Minister May saying the UK will be a truly global economy. A truly global economy has got to stick to what has been agreed globally."

Schäuble was speaking at the World Economic Forum at the Swiss ski resort in Davos, which is hosting more than 3,000 participants, of which 1,200 are chief executives or company chairs and more than 50 are world leaders.

Earlier at the event, May told leaders that the UK would become a "world leader" on trade as a result of its decision to leave the EU. But on Tuesday (17 January) in May's much-anticipated keynote speech in London, in which she set out her approach to Brexit, she warned that should the UK fail to reach an agreement with the EU, the country might adopt a low-tax model.

She said: "We would have the freedom to set the competitive tax rates and embrace the policies that would attract the world's best companies and biggest investors to Britain."

May's comments come just two months before the PM plans to invoke Article 50, the mechanism to break from Brussels, and trigger talks with the EU by the end of March.

The German finance minister said: "Before negotiations, everyone shows their muscles and, OK. We know everyone has his muscles. But we have to find solutions." Schäuble added that he expected the upcoming Brexit negotiations to be tough.

He said: "We are not happy with the decision and we are convinced it is not in the best interests of the UK, so we want to limit the impact. We will do our very best to have good negotiations, but of course there will be some consequences."

The European Commissioner for Economic Affairs, Pierre Moscovici, said that he thought Brexit would be bad for the UK and the EU.