Britain's Brexit minister David Davis backed Prime Minister Theresa May on Monday, saying claims made by former finance minister George Osborne that she was a "dead woman walking" were wrong and self-indulgent.
"This actually means for Europe, that we, as the remaining European Union, will have the opportunity to approach the British and to say: 'OK, your election result points to the fact that you might not longer be quite as happy with the Brexit decision'".
The loss left the Conservatives eight MPs short of a majority in parliament, plunging negotiations into uncertainty. May then called a snap election hoping for a bigger majority to strengthen her hand in negotiations.
A spokesman for Mrs Merkel had previously refused to be drawn on the issue out of "politeness and respect" while the process of forming a new United Kingdom government was under way.
The pound has fallen further amid doubts about Theresa May's ability to form a government and start the Brexit talks on time.
Donald Tusk, the former Polish premier who will oversee the process as chair of European Union national leaders' summits, also stressed there was "no time to lose" and a need for London and Brussels to cooperate to minimise disruption for people, businesses and governments across Europe when Britain walks out in 22 months.
"We want to negotiate quickly, we want to stick to the time plan, and so at this point I don't think there is anything to suggest these negotiations can not start as was agreed".
Speaking during a visit to Mexico, Mrs Merkel ended her brief period of "polite" restraint from commenting on Mrs May's catastrophic poll.
Britain's exit from the European Union has been plunged into uncertainty.
The German chancellor said the European Union wants talks to progress "quickly" and warned it will defend the interests of its members during the looming divorce proceedings.
Meanwhile, Mrs May's weakened position in the House of Commons as a result of losing her majority has fuelled speculation the Tories would be forced to soften their stance on Brexit.
"What really matters is whether people put investment on hold", said Tim Besley, professor of economics and political science at the London School of Economics.
"Maybe, this is a chance that we can come up to a more reasonable Brexit negotiations because in the last time (recently) I really had the feeling that everything was just being very tough and it doesn't make sense to be tough".
Other EU leaders have expressed concerns the failure to win a majority may make negotiations even more hard.
"Yet another own goal, after Cameron now May, will make already complex negotiations even more complicated", he tweeted.
"We are fully prepared and ready for negotiations to start", commission spokesman Alexander Winterstein told reporters.
The Brexit secretary said the talks would take place that week, but not necessarily on the Monday due to the clash with the Queen's speech at Westminster. He hopes outline agreements on those issues by the end of this year can open the way for discussion on a future trade deal. Mr. Tusk, in a letter to Theresa May on Friday, said that the urgent task now was to secure a least disruptive outcome in the negotiations, "The timeframe set by Article 50 of the Treaty leaves us with no time to lose".