BAE's future in doubt after Angela Merkel personally blocks deal with EADS Mr King said BAE and EADS made "huge progress" in talks with the British and French governments over the last four weeks but that the German government was the "principles" of the deal. Germany, France and Britain have been in fierce negotiations over the nature and size of state shareholdings in the enlarged companies. Germany and France would both have held at least 9pc of the enlarged company and were unwilling to give up their stakes. However, as well as holding concerns about German jobs, it is understood that Ms Merkel was fundamentally opposed to EADS merging with a defence company such as BAE. An advisor to BAE said: "We knew governments would have questions but Merkel's finite refusal has come as a surprise. Tom Enders, chief executive of EADS, told staff that Germany's opposition to the deal had been unexpected. In an e-mail to employees he wrote: "I'm ready to admit that we never expected to face such opposition against the deal, in particular not in Berlin." The British Government did not escape criticism , despite giving its backing to a deal. Unite, Britain's largest union, urged the Government to strengthen its golden share in BAE to protect jobs and UK manufacturing. "The Government needs to follow the example of Germany and France where they pursue an active industrial policy and adopt an approach that safeguards the highly skilled jobs which are critical to our country's defence," said Ian Waddell, national officer for aerospace and shipbuilding. One senior defence source said the industry is now "in a mess." They added: "There is no defence strategy [from the government]." In a joint statement from BAE and EADS, Tom Enders, chief executive of EADS, expressed regret that the deal would not go ahead. Mr Enders said: "It is, of course, a pity we didn't succeed but I'm glad we tried. Mr King said BAE is "obviously disappointed" the deal had fallen apart but said the company will now return to its "very good Plan A strategy." The BAE chief executive said he did not believe the company is now vulnerable to take a takeover bid. "I do not think the floodgates will open," Mr King stated. However, David Reeths, director of consulting at IHS Jane's, the defence and security analysis business, said: "The impacts will be wide-ranging and immense. For Ian King, the short-term challenges facing him both personally and professionally are much more significant [than EADS}. While BAE's long-term prospects could still be quite excellent, the failed merger will leave the firm much more exposed to uncertain factors beyond its control, such as major declines in the US defence budget and potential loses in an increasingly competitive international defence market.