Boris Johnson has set the UK on course for a no-deal Brexit on 31 December, announcing that he is ready to walk away from talks on a free trade agreement with the EU unless Brussels shows “a fundamental change of approach”.
Although the PM did not explicitly say he was halting negotiations, his official spokesman later told reporters: “The trade talks are over. The EU have effectively ended them by saying that they do not want to change their negotiating position.”
With just 76 days to go to the UK’s transition to post-Brexit relations with the EU, the decision sets the scene for the imposition of tariffs on European imports and a huge increase in red tape at Britain’s ports.
The prime minister was accused of taking a “hideous gamble with the country’s future” as he said it was time for the UK to prepare for an “Australian-style arrangement” with the EU, which effectively means a no-deal Brexit as Australia has no trade deal with Europe.
The dramatic move came after a two-day European Council summit ended in Brussels without the progress which Mr Johnson last month said was necessary to stay at the negotiating table.
However, Brussels made clear that it was not giving up hope of reaching agreement, declaring that chief negotiator Michel Barnier’s team will travel to London for talks next week as planned.
And European Commission president Ursula von der Leyen held out an olive branch by saying that she wanted talks to “intensify”, following British dismay that this promise was dropped from the official summit conclusions signed by the 27 EU leaders.
“The EU continues to work for a deal, but not at any price,” said Ms von der Leyen.
“As planned, our negotiation team will go to London next week to intensify these negotiations.”
But Downing Street said there was “no point” in Mr Barnier coming to London unless he is “prepared to discuss all of the issues on the basis of legal texts in an accelerated way without the UK being required to make all of the moves”.
Mr Johnson’s official spokesman said: "The trade talks are over. The EU have effectively ended them by saying that they do not want to change their negotiating position.
“The EU can either fundamentally change its position or we can leave on Australian terms.”
A Treasury forecast in 2018 found that a no-deal Brexit could knock as much as 9.3 per cent off the UK’s national income over the next 15 years, compared to 6.7 per cent with a free trade agreement.
Mr Johnson’s spokesman was today unable to provide any updated financial analysis, beyond saying that the PM thought the UK would “thrive”.
He declined to comment whether companies concerned about no-deal Brexit should now trigger any contingency plans they have to move staff and operations out of the UK.
But he said he did not think there was “any reason” for households to start stockpiling supplies of goods which they fear may run short in the New Year.
Business leaders urged Mr Johnson to “stay at the table and find a route through”.
CBI director general Dame Carolyn Fairbairn said: “After four years of negotiations and so many hurdles crossed, this is no time to give up.
“Neither side can afford to fall at the final fence. A deal is the only outcome that protects Covid-hit livelihoods at a time when every job in every country counts.”
The chief executive of the Food and Drink Federation said the UK was “heading into very dangerous territory” with shoppers set to pay “a heavy price” and industry suffering from delays and disruption at the borders.
Calling on leaders on both sides to “find a way past the current impasse”, Ian Wright said: "In the event of a no-deal Brexit … imported food and drink from the EU will face eye-watering tariffs averaging 18%, kick starting price rises.
"A no-deal outcome is bad for food and drink businesses, bad for food security, and bad for every household in Great Britain.”
Mr Johnson said the EU had “refused to negotiate seriously” with the UK on its request for a simple free-trade deal guaranteeing zero tariffs and zero quotas, similar to that signed with Canada.
Talks have foundered over fundamental differences over fisheries, state and and Brussels’ demand for a level playing field on regulation.
Mr Johnson said it was clear after this week’s two-day summit that the EU was not ready to reach agreement on terms acceptable to the UK.
“From the outset, we were totally clear that we wanted nothing more complicated than a Canada style relationship based on friendship and free trade,” said the PM.
"To judge by the latest EU summit in Brussels, that won't work for our EU partners. They want the continued ability to control our legislative freedom, our fisheries, in a way that is completely unacceptable to an independent country.
"And since we have only 10 weeks until the end of the transition period on 1 January, I have to make a judgement about the likely outcome and to get us all ready.
"Given that they have refused to negotiate seriously for much of the last few months and given that this summit appears explicitly to rule out a Canada-style deal, I’ve concluded that we should get ready for 1 January with arrangements that are more like Australia's based on simple principles of global free trade.
"And we can do it, because we always knew that there would be changed on 1 January, whatever type of relationship we had.
“And so now is the time for our businesses to get ready and for our hauliers to get ready, for travellers to get ready. And of course we're willing to discuss the practicalities with our friends, where a lot of progress has already been made on such issues as social security, aviation, nuclear co-operation, and so on.”
Mr Johnson said that the UK could approach the end of the transition period “with high hearts and with complete confidence”.
Despite most economists believing that a no-deal Brexit will deal a heavy blow to the UK’s GDP, Mr Johnson claimed that "we will prosper mightily as an independent free trading nation controlling our own borders, our fisheries and setting our own laws”.
Liberal Democrat Brexit spokesperson Christine Jardine said: "Boris Johnson’s handling of Brexit has been disastrous and these reckless comments are just further evidence of the prime minister's incompetence.
“At a time when the UK is already facing the biggest crisis in generations as a result of coronavirus, we cannot afford to crash out of the EU without a deal in place or to accept a rushed, bad deal. The government cannot allow people's livelihoods to be put further at risk, when so many are already struggling to get by.”
The chief executive of the Best for Britain campaign against a no-deal Brexit, Naomi Smith, said: “The Prime Minister was elected on a promise to secure a trade deal with the EU. To be clear, the EU has not abandoned the idea of a free trade deal with us and it would be the Prime Minister's decision to abandon these talks.
“Without a deal, tariffs would destroy the competitiveness of many UK industries, meaning the current economic crisis will cut deeper into people’s lives.
“At the same time the government readily admits that most businesses are not prepared for no-deal. They don’t have the cash reserves to make the necessary changes and the government still hasn’t put in place the correct customs infrastructure.
“The EU has signalled its desire to carry on talks. Walking away now would be a hideous gamble with the country’s future.”
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