Boris Johnson says it’s time to “get ready” for the prospect of no free trade deal with the EU on 1 January.
The prime minister claimed Brussels had “abandoned” the ambition but insisted “we always knew there would be changes” next year once the transition period ends “whatever type of relationship we had”.
Speaking from Downing Street after an EU summit both sides said was the deadline for hammering out a trade deal, Mr Johnson said it looked like the country was heading for what he called “the Australian solution”.
He suggested he is not completely walking away from negotiations, adding: “What we’re saying to them is come here, come to us, if there’s some fundamental change of approach.”
The UK left the EU on 31 January this year.
After that the country entered a transition period, following many of the same rules meaning there was no change to trade and tariffs or things like freedom of movement.
Negotiators have since been trying to hammer out a trade deal to come into force when that runs out at the end of December.
But Mr Johnson said in a dramatic intervention that “there doesn’t seem to be any progress coming from Brussels”.
He told businesses and hauliers to “get ready” for there to be no free trade deal.
Instead he said the UK’s relationship with the EU could be more like the one Brussels has with Australia, which will mean tariffs being introduced on goods between the UK and the 27 other EU countries.
And Mr Johnson urged people to “embrace the alternative” with “high hearts”, vowing the UK will “prosper mightily”.
He is due to hold a news conference later on Friday afternoon.
Ursula von der Leyen, president of the EU Commission, said she would continue to work for a deal – “but not at any price”.
“As planned, our negotiation team will go to London next week to intensify these negotiations,” she added.
The pound fell by a cent against the dollar immediately following Mr Johnson’s statement, but quickly recovered to trade at just under $1.29.
Analysis: EU won’t be encouraged or upset by PM’s intervention
By Adam Parsons, Europe correspondent
The EU won’t exactly see these comments as encouraging, but nor will they be especially upset.
Mr Johnson has left the way clear for talks to continue, inviting the EU to “come here, come to us”.
And by happy coincidence, Michel Barnier had already offered to continue negotiations in London next week.
As for the commitment to prepare for an Australian-style deal, by which he means just about no deal at all, EU sources have said to me that they think everyone should have been making those preparations anyway, just in case.
Does this turn up the heat? Maybe, although the pressure of the clock is doing that anyway.
The EU does think that slight progress has been made, but nobody is claiming that a deal is around the corner.
The economic damage of COVID-19 is a much bigger problem for many leaders.
Plenty of countries see a Brexit deal as a distraction at a time when they want to spend their time concentrating on how to respond to the resurgent pandemic.
And there is a school of thought among some in Brussels that a period of no-deal might be a good thing, in order to focus minds on a subsequent return to negotiations.
One diplomat said to me: “If we end up with no-deal, and massive queues of lorries on both sides of the Channel, then everyone might negotiate with a bit more purpose.”
The mantra here has been “we want a deal, but not at any cost”. There’s not much sign of anyone embracing a fundamental rethink at this point.
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