15/10/2018 18:55 BST | Updated 16/10/2018 15:09 BST

EU’s Donald Tusk Warns Theresa May That A No Deal Brexit Is Now ‘More Likely Than Ever Before’

As drugs giant AstraZeneca halts UK investment over 'uncertainty’.

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European Council President Donald Tusk

The EU has warned Theresa May that a no-deal Brexit is “more likely than ever before” as talks between London and Brussels continue to remain deadlocked over future trade and customs.

European Council President Donald Tusk issued his stark assessment in a letter to all 28 EU leaders ahead of a crunch summit this week that the PM had hoped could provide a breakthrough for the UK’s exit plans.

Tusk insisted that he was not giving up on securing progress, but added: “Responsible as we are, we must prepare the EU for a no-deal scenario, which is more likely than ever before.”

With Northern Ireland’s borders with Ireland and the rest of Britain still a major sticking point, May also revealed to MPs “the EU says there is not time to work out the detail” of her own solution “in the next few weeks”.

And Irish PM Leo Varadkar suggested the entire negotiations could go right to the wire, with a deal possibly delayed until December. The UK is due to leave the EU on March 29, 2019, with or without a proper withdrawal agreement or future trade deal.

BFM Business

No.10 announced that May would provide the EU summit with an update on her plans on Wednesday night, before leaving the other 27 leaders to discuss them at a private dinner.

Fears over the impasse were heightened as pharmaceutical giant AstraZeneca announced it was halting all investment into the UK because of continued “uncertainty” over Brexit.

Leif Johansson, the firm’s non-executive chairman, told France’s Le Monde newspaper that it had taken the drastic move because he feared Britain would become “an isolated island in the middle of the Atlantic Ocean”.

AstraZeneca, which provides hundreds of jobs at its sites in the UK, made plain that the lack of clarity over Brexit and the prospect of more delay had given it no choice.

Johansson said: “If a transition deal does not make clear what will happen in the future, AstraZeneca will maintain its decision not to invest.

“A Brexit agreement will need to ensure that Britain does not become an isolated island in the middle of the Atlantic Ocean.

“In business, uncertainty often forces you to make decisions. But what is frustrating is to have to do so when the existing system works very well — this is costing us money and brings no benefit.”

AstraZeneca's site in Macclesfield, Cheshire

Several big drugs companies like AstraZeneca have been telling ministers that the industry will suffer in the UK in a no-deal Brexit because their trade and testing is heavily regulated and drugs are manufactured in facilities across the EU.

The European Medicines Agency said earlier this year that many pharmaceutical manufacturers are not ready for Brexit.

Eamon O’Hearn, GMB union national officer said: “For months GMB has warned about the threat to the UK pharmaceutical industry, and the thousands of workers it employs, because of the Government’s mishandling of Brexit talks. 

“GMB is not surprised that AstraZeneca has suspended investment in the UK, given it has been warning of this possibility, due to an uncertain business environment.”

Labour MP Virendra Sharma MP, part of the pro-EU Best for Britain campaign, added: “This is case of project fear being shown to be project fact. Businesses will leave the country over Brexit - that means jobs being cut, high street prices going up and communities up and down the UK being hurt.” 

The drugs giant’s warning came as Steven Armstrong, the head of Ford’s European arm, also said that a no-deal Brexit “would be pretty disastrous” for UK industry.

Armstrong told the BBC that if the UK reverted World Trade Organisation tariffs in the event of a no-deal it “would certainly make us think long and hard about our future investment strategy”.

Boris Johnson

In the Commons, May came under attack from both wings of her party as she updated MPs on the state of talks with Brussels.

The PM refused to give guarantees to either Boris Johnson or former Tory leader Iain Duncan Smith that there would be a specific end date after which the UK would not take part in a “temporary” customs arrangement with the EU.

Brexiteer Simon Clarke said that she had “failed to reassure” her backbenchers that the UK would definitely leave such a union with the 27-nation bloc by December 2021. May only said that it was her “expectation” that the UK would cease the arrangement by then.

“She continues to argue for a common [EU] rulebook that many of us on these benches will not be able to support. Will she not pivot to a super-Canada policy [a trade deal without EU regulations]? I urge her to do so. Please before it is too late.” 

But former Cabinet minister and leading ‘Remainer’ Justine Greening also told May that her ‘Chequers’ plan for to keep the UK tied to some EU rules would mark a fundamental “loss of sovereignty” because the country would have no say over the shape of future rules.

Senior Brexiteer Cabinet ministers were due to meet privately in the Commons on Monday night ahead of a full Cabinet meeting on Tuesday.