Boris Johnson has said that the public and businesses should prepare for a no-deal Brexit as the prime minister shifted his tone on securing a trade deal with the EU.
The PM said there is a “a strong possibility – a strong possibility – that we will have a solution that’s much more like an Australian relationship with the EU than a Canadian relationship with the EU”.
An “Australia-style” agreement is another way of saying leaving the the bloc without a bespoke trade deal.
He added: “That doesn’t mean it’s a bad thing. There are plenty of ways as I’ve said to turn that to the advantage of both sides. There are plenty of opportunities for the UK.
“But yes, now is the time for the public and businesses to get ready for January 1, because believe me there’s going to be change either way.
“There will be change whether there’s a Canada-style deal or an Australia-style deal.”
The prime minister said the “deal on the table is really not at the moment right”, saying it would leave the UK vulnerable to sanctions or tariffs if it did not follow the bloc’s new laws.
He said the current proposals would keep the nation “kind of locked in the EU’s orbit”, but insisted negotiators would “go the extra mile” to get a treaty in time for December 31.
But Johnson said he told his Cabinet on Thursday evening to “get on and make those preparations” for a departure without a deal in place, or in an “Australian relationship” as he puts it.
In a pooled interview with broadcasters, the prime minister claimed that in the late stages the EU had renewed the notion of “equivalence” between the UK and the EU – arguing new laws brought in by Brussels would have to be followed in the UK.
He explained: “And it was put to me that this was kind of a bit like twins and the UK is one twin the EU is another and if the EU decides to have a haircut then the UK is going to have a haircut or else face punishment.
“Or if the EU decides to buy an expensive handbag then the UK has to buy an expensive handbag too or else face tariffs… Clearly that is not the sensible way to proceed and it’s unlike any other free trade deal. It’s a way of keeping the UK kind of locked in the EU’s orbit – in their regulatory orbit.”
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 negotiators resumed talks, 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 the weekend.
On Thursday, von der Leyen said at a summit of EU leaders that negotiations are “difficult”.
In his first interview since the dinner, 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 to British demands.
“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,” Johnson added.
“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.”
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, which experts have indicated could be around £45 billion.
As stock markets in Europe closed the pound was down 1.18% against the euro and down 0.84% against the dollar, with traders nervous as time for a deal to be agreed slipped away.
Meanwhile, the EU contingency proposals for no deal included for Europe’s fishing boats to continue having access to UK waters next year.
The EU’s leaders were being updated by von der Leyen on the state of play during the summit in Brussels.
The fact that negotiators Lord Frost and Michel Barnier were meeting again on Thursday at least gave some cause for hope.