European Union chief Ursula von der Leyen and Prime Minister Boris Johnson can agree on one thing: the EU and the UK are heading for a no-deal split.
Ms von der Leyen told the EU’s 27 leaders in Brussels on Friday that the bloc was unlikely to get a trade deal with the UK by Sunday’s deadline.
“Situation is difficult. Main obstacles remain,” an EU official said of Ms von der Leyen’s message to EU leaders.
Boris Johnson has also put business and the public on notice to prepare to leave the EU without a deal.
Speaking a day after crisis talks with EU chief Ursula von der Leyen ended without a breakthrough, Mr Johnson said there was a “strong possibility” the UK would not strike a deal with its largest trading partner.
The warning came as Irish Prime Minister Michael Martin insisted “97 per cent of the deal had been agreed”.
Mr Martin pleaded with both sides to reach agreement because there are “no winners and losers” in a no-deal situation.
Ireland is the EU member state most at risk from Britain crashing out of the bloc without a deal.
Mr Martin said: “Dialogue is key and both teams have given themselves a deadline of this Sunday, and I think the key to unlocking this is to stand back and look at the overall picture here.
“There can be no winners or losers in these negotiations from now on. There has to be a common purpose in terms of getting a deal over the line because it makes sense to get a trading deal.
However, Mr Johnson said the bloc’s demand that the UK follow future changes in EU rules was a major obstacle.
“There’s now the strong possibility we will have a solution that’s much more like an Australian relationship with the EU than a Canadian relationship with the EU,” Mr Johnson said.
“Looking at where we are, I do think it’s vital that everybody now gets ready for that Australian option.”
Shadow Foreign Secretary Lisa Nandy said the opposition Labour party was prepared to support a deal.
She told BBC Radio 4’s Today programme: “A deal is better than no deal. It represents a floor not a ceiling of what we can achieve for this country.
“But what we can’t have is a situation where the government is actively doing harm to our businesses and preventing them from thriving and doing well.”
The “Australian option” is Downing Street’s code for no deal.
In that scenario, the UK would fall back on the rules of the World Trade Organisation and face tariffs, as well as quotas, when the transition ends on December 31.
Former Australian premier Malcolm Turnbull told BBC’s Question Time that his country doesn’t have a “satisfactory” trade relationship with the EU.
“Be careful what you wish for: Australia’s relationship with the EU is not one, from a trade point of view, that Britain I think would want,” he said.
“There are very big barriers to Australian exports, agricultural products in particular. There’s a lot of friction in the system in terms of services. So there’s a lot to aim for.”
The pound extended its decline after Johnson’s intervention. His remarks couldn’t come at a more delicate time as EU leaders meet in Brussels after seeing off a threat by Hungary and Poland to block a $2.2 trillion stimulus package.
Earlier on Thursday, the EU published its contingency plans in case trade talks collapse.
The bloc aims to maintain basic air and road links between EU nations and the UK, while also allowing access to each other’s fishing waters.
The European Commission said there was “significant uncertainty” about whether a deal would be in place by January 1.