The prime minister will tell Brussels that if no agreement can be reached by the October 15 European Council, then both sides should be prepared to “accept that and move on”.
The move, described as a “nuclear option” in the paper, designed prevent a hard border between Northern Ireland and the Republic of Ireland could also blow up the negotiations.
Louise Haigh, Labour’s shadow Northern Ireland secretary, said it would be “an act of immense bad faith” that would sabotage the UK’s ability to sign trade agreements with other countries.
Nicola Sturgeon, the Scottish first minister, said it would be the “repudiation” of the deal repeatedly described by the prime minister in the general election as “oven ready”.
“This will significantly increase likelihood of no-deal, and the resulting damage to the economy will be entirely Tory inflicted. What charlatans,” she said.
Simon Coveney, the Irish foreign minister, said it “would be a very unwise way to proceed”.
Johnson’s comments are the latest in a series of statements from senior government figures outlining a hardening stance towards the EU.
The UK’s negotiator David Frost and foreign secretary Dominic Raab both used interviews at the weekend to vow not to back down on the remaining sticking points.
Raab told Sky News’ Sophy Ridge On Sunday programme that the negotiations had been “boiled down to two outstanding bones of contention” – control of UK fishing waters and the level of taxpayer support the government will be able to provide businesses – and argued neither “principle” could not be “haggled away”.
Frost is due to hold another round of key negotiations in London with the EU’s chief negotiator, Michel Barnier, this week, as they look to find a solution to the remaining issues in order to have a deal readied for when the transition period comes to an end on December 31.
But the prime minister will make clear on Monday that time is running out if the two sides are to ratify an agreement in time for 2021.
“We are now entering the final phase of our negotiations with the EU,” Johnson is expected to say.
“The EU have been very clear about the timetable. I am too. There needs to be an agreement with our European friends by the time of the European Council on October 15 if it’s going to be in force by the end of the year.
“So there is no sense in thinking about timelines that go beyond that point.
“If we can’t agree by then, then I do not see that there will be a free trade agreement between us, and we should both accept that and move on.”
Raab said on Sunday that he would prefer to leave with a deal and that there would be “damaging impacts” felt on both sides of the Channel if no deal was reached.
Johnson, however, will argue that collapsing the trade talks next month would still represent “a good outcome for the UK” and that his administration was preparing for such an eventuality.
The prime minister is planning to say that no-deal means the country would have a “trading arrangement with the EU like Australia’s”, meaning it would fall back on trade protocols as set by the World Trade Organisation when doing business with its largest trading partner.
“I want to be absolutely clear that, as we have said right from the start, that would be a good outcome for the UK,” the PM will say.
“As a government we are preparing, at our borders and at our ports, to be ready for it.
“We will have full control over our laws, our rules, and our fishing waters.
“We will have the freedom to do trade deals with every country in the world. And we will prosper mightily as a result.
“We will of course always be ready to talk to our EU friends even in these circumstances.
“We will be ready to find sensible accommodations on practical issues such as flights, lorry transport, or scientific co-operation, if the EU wants to do that.
“Our door will never be closed and we will trade as friends and partners – but without a free trade agreement.”
But Johnson, in an apparent bid to focus minds as another set of talks gets under way on Tuesday, will say that there is “still an agreement to be had”, one that is based on deals Brussels has previously struck with “Canada and so many others”.
According to Downing Street, the prime minister will add: “Even at this late stage, if the EU are ready to rethink their current positions and agree this I will be delighted.
“But we cannot and will not compromise on the fundamentals of what it means to be an independent country to get it.”
Labour’s Haigh said: “Just 10 months after signing a treaty promising to implement the Northern Ireland protocol, Boris Johnson’s government is already threatening to renege on the UK’s legal obligations. This would be an act of immense bad faith.
“Not only would it be viewed dimly by future trading partners and allies around the world, it would make it more difficult for us to hold other governments to account if we cannot stick to our word and obligations that we have agreed to.”
It came after one of Theresa May’s former Number 10 advisers accused Frost of having a “brass neck”, after he said the former PM’s negotiators had “blinked and had its bluff called at critical moments” during talks over a Withdrawal Agreement.
Lord Barwell tweeted: “Given the Withdrawal Agreement & Political Declaration David Frost negotiated last autumn were 95% the work of his predecessors – and the 5% that was new involved giving in to the EU’s key demand (for some customs processes when goods move GB to NI) – that quote’s some brass neck.”