UK gets ready for no deal with EU

Negotiations between Britain and the EU are set to continue thisweek even after Boris Johnson said a trade deal was unlikely.

The British prime minister said the UK would get ready to leave the bloc’s single market and customs union at the end of the year without a new agreement in place.

He blamed the bloc for refusing to “negotiate seriously”, but kept the door open for further talks. He said he would be willing to hear from the EU side if it came back with “a fundamental change of approach”.

Last month, Johnson set a deadline of October 15 for an agreement to be struck — or be clearly within sight — saying there would be no point in continuing talks beyond this week without adequate progress.

Britain considers that trade talks with the EU are “over”, Johnson’s spokesperson, James Slack, said on Friday, adding that the EU effectively ended them by saying it is for the UK to change its position.

“There’s no point in trade talks if the EU doesn’t change its position,” Slack said.

French President Emmanuel Macron insisted his push to keep access to British fishing waters was not the roadblock to a deal.

“Fishing is used by the UK in a tactical way,” he said. “Why? Because if there’s a no deal, this is the only topic where Boris Johnson can say ‘I won’.”

The choices of EU member states “aren’t designed to make the prime minister of Great Britain happy”, Macron said.

UK officials want the message to be that trade talks are off. But their EU counterparts are letting it be known they expect to be back in London tomorrow.

Companies still don’t know what trading relationship they will face with the EU as time runs out, and many don’t have the resources to prepare, according to Mike Cherry, national chair of the Federation of Small Businesses.

“The government is essentially saying get ready for a no-deal outcome even though a deal could still happen,” Cherry said. “The last time we were told to prepare for a nodeal scenario you saw a big uptick in stockpiling. There simply isn’t the cash or staff capacity to make that possible this time round, with a lot of employees still furloughed amid weak demand.”

After a summit of EU leaders in Brussels, German Chancellor Angela Merkel said: “It would be of mutual interest to have an agreement, but of course we must be prepared for the opposite case. For us, from the [European] Council, talks that will continue in coming days are foremost.”

Ian Wright, CEO of the Food and Drink Federation, a UK lobby group, said: “The prime minister’s statement signals that we are heading into very dangerous territory. We need leaders on both sides to find a way past the current impasse in order to progress talks.”

Without a trade deal, food and drink imported from the bloc would face tariffs averaging 18%, which will spur higher prices, Wright said.

A no-deal Brexit means firms would trade on terms set by the World Trade Organisation in most areas, with tariffs on goods and an agreement on the processes to reduce some regulatory barriers.

The imposition of tariffs means UK exporters lose competitiveness in their biggest market — with the EU accounting for more than 40% of foreign sales — and UK consumers face higher prices in stores.

In an analysis published earlier this week, Bloomberg Economics forecast that the absence of a deal could deliver a near-term loss of about 1.5% of GDP — about £300bn (R6,500bn) to the UK economy.

It would also have a long-term effect, permanently putting a brake on potential growth.

‘PM signals we are heading into very dangerous territory’