Downing Street has abandoned hope of clenching a Brexit trade deal with Brussels and instead ramped up preparations for trading on World Trade Organization (WTO) terms, but has insisted it is not what it wants the outcome to be.
Ministers are now working on the assumption that no deal will be struck before the December 31 deadline, meaning Britain will then have to trade on WTO terms with the EU.
The latest round of ‘accelerated’ Brexit trade talks kicked off in London this week and are expected to end on Thursday in deadlock.
Both sides cannot agree on ways to break the stalemate on issues such as fisheries, the level playing field, and the role of the European Court of Justice after Brexit.
Prime minister Boris Johnson repeatedly said he wanted a trade agreement finished by July and pushed for an ‘accelerated’ timeframe for talks.
With that deadline looming large, and both sides solidifying their positions against major issues, any hope of progress of hitting the prime minister’s goal is fading fast.
That has spurred ministers to ramp up no deal preparations.
A senior source said told the Telegraph that the government ‘has been making it clear for a while now that it is prepared for no deal.’
One UK negotiating team source said: ‘We wanted to see an agreement this month. It’s clear from the EU side that’s not going to happen.
‘No trade deal has to be the working assumption, because that’s what we have to prepare for. But it doesn’t mean it’s what we want or are working to make happen.’
Officials in Brussels insisted that the EU was ready for whatever the outcome of the trade talks may be.
‘They are right to work on the basis of no deal [as] we are as well,’ a diplomat from an influential member state said.
He also said a ‘bare bones’ trade agreement being pushed by British negotiators made ‘no material difference’ between a deal or no deal.
Britain is seeking a zero tariff, zero quota trade deal, but trading on WTO terms would mean tariffs on goods and red tape that could lead to delays in the passage of goods entering and leaving the UK.
Earlier this month, the government launched a new media blitz, dubbed ‘let’s get going’, to encourage UK businesses to restart their no-deal planning.
But the Institute for Government (IfG) said last week that three out of five firms had not even begun to prepare for the end of the transition period amid ongoing uncertainty about the future relationship with the EU.
‘Since the pandemic took hold in February, and with the formal lockdown taking effect in late March, government and business resources have been focused on responding to the pandemic, rightly prioritising this over Brexit preparations,’ the IfG said.
‘Firms reeling from the economic consequences of coronavirus are poorly placed to prepare for Brexit: in many cases, in a worse position than in the months leading up to the potential no deal in October 2019.’