Boris Johnson has warned there is a “strong possibility” the UK will fail to broker a trade agreement with the EU as he told the nation to prepare for no-deal at the end of the Brexit transition period.
The Prime Minister said the current proposals would keep the nation “kind of locked in the EU’s orbit” but insisted negotiators would “go the extra mile” in trying to get a treaty in time for December 31.
Mr Johnson told his Cabinet on Thursday evening to “get on and make those preparations” for a departure on terms like Australia’s, which does not have a trade deal with Europe unlike Canada.
“I do think we need to be very, very clear, there is now a strong possibility – a strong possibility – that we will have a solution that is much more like an Australian relationship with the EU than a Canadian relationship with the EU,” he said.
Elsewhere in the interview, he added: “So what I told the Cabinet this evening is to get on and make those preparations. We’re not stopping talks, we’ll continue to negotiate but looking at where we are I do think it’s vital that everyone now gets ready for that Australian option.”
Culture Secretary Oliver Dowden said a deal is “90% of the way there” but that the Government will not accept an agreement at any price.
And he insisted ministers were not “taking people for a ride” by saying the UK would trade on “Australian-style” terms with Brussels if it failed to reach an agreement.
He told BBC Radio 4’s Today programme: “I don’t think it is taking people for a ride to take a major economy that is relatively similar to the United Kingdom and compare the trading relationship.
Negotiations are still ongoing but the end of the transition is near. There is no guarantee that if & when an agreement is found it can enter into force on time. We have to be prepared including for not having a deal in place on 1 January. Today we present contingency measures â¤µï¸ pic.twitter.com/FQ4Urn9YUC— Ursula von der Leyen (@vonderleyen) December 10, 2020
“I don’t dispute that there will be challenges in relation to having an Australia-style relationship – by the way, it’s worth saying those challenges apply to both sides, that’s why it is so much in the interests of both sides to reach that deal, we are 90% of the way there.
“But we can’t, as Labour appear to be suggesting… accept it at any price.”
The Prime Minister’s warning came after his dinner with European Commission president Ursula von der Leyen in Brussels on Wednesday failed to produce a breakthrough.
As the chief negotiators resumed talks, Ms von der Leyen set out no-deal plans for emergency legal agreements to keep planes flying to the UK and lorries crossing Europe.
The two leaders agreed that a decision on the future of the negotiations will be taken by the end of Sunday.
Ms von der Leyen said at a Brussels summit, where she is due to update EU leaders on the state of play, that negotiations are “difficult”.
In his first interview since the dinner, Mr Johnson said the UK will do “everything we possibly can” to get a deal when asked if it would be a failure of politics not to strike one.
He said he would be willing to return to Brussels, or head to Paris or Berlin, to get a deal over the line, in a clear reference to French President Emmanuel Macron and German Chancellor Angela Merkel who are seen as two figures adamant not to cave in to British demands.
“At the moment, I have to tell you in all candour that the treaty is not there yet and that is the strong view of our Cabinet as well,” Mr Johnson added.
He said that sticking points include “equivalence”, which he said would keep the UK “locked” in the bloc’s regulatory orbit, and fisheries, which he said under current proposals would mean “we wouldn’t still have control of our waters”.
At the moment, I have to tell you in all candour that the treaty is not there yet and that is the strong view of our Cabinet as wellPrime Minister Boris Johnson
Scotland’s First Minister Nicola Sturgeon warned that no-deal now seems “the overwhelming likelihood”.
“I think the chances of a deal now are almost vanishingly small. They’re not non-existent, and I remain hopeful, I guess, because no-deal would be catastrophic,” the SNP leader told CNN.
Senior Tory backbencher Tobias Ellwood said it would cause “colossal” long-term damage to the UK economy as he urged the two sides to show “political courage” to broker an agreement.
“Let’s not walk away and cause a no-deal that would be devastating to not just Britain but to the European Union as well,” the chairman of the Commons defence committee told BBC News.
Malcolm Turnbull, who was Australia’s prime minister until 2018, warned Mr Johnson of the “very large barriers” to trading with the EU that the nation faces.
So, you know, be careful what you wish for. Australia’s relationship with the EU is not one from a trade point of view that I think Britain would want, franklyMalcolm Turnbull, former PM of Australia
“So, you know, be careful what you wish for. Australia’s relationship with the EU is not one from a trade point of view that I think Britain would want, frankly,” the Mr Turnbull told BBC Question Time.
Mr Johnson insists the UK can “prosper mightily” under a no-deal but the Office for Budget Responsibility financial watchdog has suggested that a no-deal outcome could wipe 2% off gross domestic product – a measure of the size of the economy – in 2021.
Experts have indicated that could be around £45 billion.
Supermarkets and their shoppers would be hit with a £3.1 billion annual “tariff bombshell” without a deal, with 85% of foods imported from the EU expected to face tariffs exceeding 5%, according to the British Retail Consortium.
Meanwhile, the EU contingency proposals for no-deal included for Europe’s fishing boats to continue having access to UK waters next year.
In response, the Prime Minister’s official spokesman said: “We would never accept arrangements and access to UK fishing waters which are incompatible with our status as an independent coastal state.”
But he said the Government would “look closely” at the mini-deals proposed by the EU if there is no overall agreement.
The pound continued to fall on Friday as traders’ fears of a no-deal Brexit intensified.
Against the dollar it hit a three-week low of 1.323 on Friday, down 0.5%. Against the euro it fell to an 11-week low at 1.091, down 0.4%.
Typically the FTSE 100 would rise on a weak pound but it too was down 0.5% within an hour of opening.
Ayush Ansal, chief investment officer at the hedge fund Crimson Black Capital said: “With a no-deal departure from the EU now arguably odds-on, the UK is heading for the worst possible outcome at the worst possible time.
He added: “Some market watchers are even suggesting the pound could fall to parity with the dollar in the event of no-deal, which would be a symbolic coup de grace for sterling.”