Merkel hardened the tone from Berlin as Germany and its EU partners strive to draw up an agreement on future relations between Brussels and London after Britain's departure from the bloc.
British Prime Minister Boris Johnson wants to be able to define the scope of those relations but “thereafter he will of course have to accept the consequences — that is, an economy less tightly linked” with its continental neighbours, Merkel said in an interview with the Europa newspaper alliance.
After leaving the EU, Britain and Brussels have been working on establishing new trade links to come into force once a post-exit transition period expires at year's end.
Germany is meanwhile to take over the EU's rotating presidency for six months from July 1.
“We must get away from the idea that it is we who define what the United Kingdom may wish,” indicated Merkel, who has consistently sought to help bring about an outcome which avoids a hard Brexit.
“The United Kingdom defines and we, as the EU27, make an appropriate response,” said Merkel.
“If the United Kingdom does not want regulations comparable to that of Europe in terms of the environment, the labour market or social norms, our relations will lose intensity,” she observed.
The EU must additionally work its way through tough negotiations on a €750 billion ($800 billion) post-coronavirus recovery fund for countries worst hit by the pandemic.
She warned that the result could have an “explosive political impact” that could threaten democracy.
“For Europe to survive, its economy must also survive,” she concluded.