The Government is expected to backtrack on its plan to introduce full border checks with the EU from January 1 over fears of the economic impact of coronavirus.
Cabinet Office minister Michael Gove is anticipated to make an announcement on Friday over border operations for when Brexit fully comes into effect at the end of the transition period.
It comes as the UK economy contracted by more than a fifth in the first full month of lockdown, as shops and factories closed and workers were sent home.
The Office for National Statistics (ONS) said that economic activity was down by 20.4% in April, the largest drop in a single month since records began in 1997, and worse than many experts were forecasting.
The UK had committed to introduce import controls on EU goods in the new year, but ministers are now expected to adopt a more flexible approach to prevent the departure compounding the chaos from Covid-19.
A Government source said: “We recognise the impact that coronavirus has had on UK businesses, and as we take back control of our laws and our borders at the end of this year, we will take a pragmatic and flexible approach to help business adjust to the changes and opportunities of being outside the single market and the customs union.”
Mr Gove held the second joint committee agreed under the Withdrawal Agreement with European Commission vice president Maros Sefcovic on Friday.
I just chaired a constructive EU Joint Committee meeting with @MarosSefcovic— Michael Gove (@michaelgove) June 12, 2020
I formally confirmed the UK will not extend the transition period & the moment for extension has now passed. On 1 January 2021 we will take back control and regain our political & economic independence pic.twitter.com/nZjNpez8LI
Despite calls from Scotland and Wales for an extension to the transition period to avert an “avoidable” economic shock, Mr Gove “formally confirmed” that the UK will not be asking for a delay, saying the “moment for extension has now passed”.
Mr Sefcovic told a briefing in Brussels that the EU “remains open to such an extension”, but said Mr Gove had been “very clear, unequivocal” that the UK will not seek one “so we take this decision as a definitive one”.
UK sources were keen to depict the meeting as the last formal opportunity to request an extension to the transition period, as it is the last scheduled meeting of the joint committee before the July 1 deadline.
But both sides can agree to hold another such meeting, where under the Withdrawal Agreement a delay could be asked for.
Boris Johnson has repeatedly insisted he will not ask for a delay, despite businesses and critics warning of the dangers of a departure without a trade agreement in place.
Nicola Sturgeon and Mark Drakeford, the First Ministers of Scotland and Wales, wrote to the Prime Minister on Friday calling on him to request the extension, saying it would be “extraordinarily reckless” to end the transition in the new year.
“Without an extension to the transition period, at very best there will only be a damaging ‘bare bones’ trade deal or even worse, a disastrous no-deal outcome,” they said.
“It would pile a further very significant economic and social shock on top of the Covid-19 crisis, hitting businesses whose reserves in many cases have already been exhausted, leading to more business closures and redundancies.
“But in this case, the shock would be avoidable.”
A virtual summit between the Prime Minister and EU chief Ursula von der Leyen to try to break the deadlock in trade negotiations has been scheduled for Monday.
The negotiating teams have also agreed to “an intensified timetable” for July with possible discussions in person if public health guidelines enable them during the coronavirus pandemic.
European Council president Charles Michel and the president of the European Parliament, David-Maria Sassoli will also join the political talks.
A Downing Street spokesman said: “The UK and the EU have agreed an intensified timetable for FTA negotiations in July.
“This new process will involve a mix of formal negotiating rounds and smaller group meetings, both in London and Brussels assuming public health guidelines enable this.”
The pace of talks will be scaled up so negotiators will meet in each of the five weeks between June 29 and July 27, No 10 said.
The UK’s 14-day quarantine period for new arrivals should not hinder the talks in its current form, with the rules having an exemption for those on official visits such as negotiations.
The new details came after the fourth round of negotiations failed to reach a breakthrough last week.
EU chief negotiator Michel Barnier lamented there having been “no significant areas of progress” as he accused the UK of having “backtracking” on the agreed political declaration.
His counterpart in Downing Street, David Frost, said they would have to “intensify and accelerate” the process if there was to be any chance of an agreement.
Both sides also said the remote meetings had reached their limit and that face-to-face meetings would be needed in order to progress.