The UK appears close to abandoning all hope of a post-Brexit trade deal after weeks of talks rolled on with no breakthrough.
The fifth round of negotiations will end tomorrow with “significant differences” on a string of issues, including fishing rights and following EU rules.
According to the Telegraph, it is now the government’s central working assumption that there will be no deal by the time EU rules end on December 31.
That will mean having to trade on World Trade Organisation terms – with strict rules and steep tariffs on everyday goods sent to and from the EU.
A senior source said it’s now assumed “there won’t be a deal” – though a “basic” agreement could still be possible if the EU gives ground.
Another source said: “We’re neither at a breakthrough nor a breakdown”.
Downing Street insisted there was “no change” to the timetable for intensified talks, which runs through to mid-August – but admitted little progress.
Boris Johnson’s official spokesman said the “preference” was for a trade deal but warned “we will make sure that we are prepared for all possible scenarios.”
He added: “We don’t want a long, drawn-out process that takes it into the autumn.”
The Prime Minister has refused to extend the transition period for Brexit beyond December 31 despite the coronavirus crisis.
That means a host of EU rules will end on January 1 without any new deal to fall back on.
Traders have been warned to prepare for lengthy and costly customs checks running into billions of pounds, and the government is looking at building a lorry holding park a few miles from the port of Dover.
The Prime Minister’s official spokesman said: “Round five negotiations are ongoing and we remain committed to working hard to finding the outlines of a balanced agreement.
“We have been clear that discussions throughout this intensified process have continued to be constructive but significant differences still remain on a number of important issues.
“Our preference is to leave with an FTA as long as it guarantees our political and economic independence.
“But we will make sure that we are prepared for all possibles scenarios.”