Boris Johnson today put Britain on high alert for a no deal Brexit when he accused the EU of "effectively ending" trade negotiations.
The Prime Minister was about to wash his hands off the talks and sent a clear message that the bloc must come to us with concessions if further progress is to be made.
Mr Johnson made it clear that Michel Barnier should only travel to London next week if he has a "fundamental change in approach" and stated that the UK would now step up its preparations for WTO "Australian style" terms.
He stopped, however, formally canceling the next round of meetings – and EU officials were pleased that despite the rhetoric, he had cut his own “tough” deadline for an agreement.
The President of the European Commission, Ursula von der Leyen, insisted that Mr Barnier would take part in the negotiations this week "as planned".
Mr Johnson set the European Council summit yesterday as the crucial moment in assessing whether an agreement needs to be reached.
However, negotiations remain at a stalemate in a number of key areas, including post-Brexit fishing rights, as EU leaders refused to budge last night, saying it was up to the UK to do the next step to do.
The two teams now appear to be embroiled in a high-stakes game as time runs out to the end of the post-Brexit transition in December.
Ms von der Leyen, President of the European Commission, responded to Mr Johnson's intervention that formal trade talks would still take place in London next week.
She tweeted: 'EU-UK talks: The EU continues to work for a deal, but not at any cost.
"As planned, our negotiating team will go to London next week to step up these negotiations."
Boris Johnson told the EU today to come to us when it is ready to compromise on terms of a post-Brexit trade deal as Britain is now stepping up preparations for a disorderly split
European Commission President Ursula von der Leyen responded to Mr Johnson's comments that talks will resume next week in London
The pound sterling is slipping on the prime minister's tough line in trade talks with the EU
The pound sterling fell against the US dollar to USD 1.2882 and fell 0.2 percent against the euro, according to the Prime Minister
The pound sterling fell sharply after Boris Johnson raised prospects for a Brexit trade deal today /
Prior to the announcement, the pound rose to $ 1.2962 against the US dollar.
After that, however, it fell to $ 1.2882 and fell 0.2 percent against the euro.
After Ursula von der Leyen had made it clear that talks would be held in London next week, however, she recovered.
Against the dollar, it returned to $ 1.2904.
Mr Johnson suggested last month that if the October 15 summit fails to reach an agreement, both sides should step back from the talks and prepare for a divorce without an agreement.
The EU heads of state and government refused to bow to the deadline as they signaled their willingness to continue discussions yesterday evening but gave no reason.
In a text adopted by the Prime Minister's Day, the Heads of State or Government invited EU negotiator Michel Barnier to continue talks and urged the UK to "take the necessary steps to bring about a To enable agreement ".
Mr Johnson gave a tough response to the bloc this afternoon, saying the UK will now step up efforts to prepare for a no-deal split, as he also kept the door open for talks that should continue when the EU is over changes direction.
He said, “As far as I can see, they have given up the idea of a free trade agreement. There does not seem to be any progress from Brussels.
“What we tell them is that we only come here, come to ourselves, if the approach changes fundamentally. Otherwise we like to talk about the practicalities I have described, social security problems, road transport and so on.
"But unless there is a fundamental change in approach, we will go for the Australian solution, and we should do it with great confidence, great heart and confidence because we can."
Australia does not have a comprehensive trade agreement with the EU and also does far less business with Brussels than the UK.
In a no-deal split, the EU would impose tariffs on British goods. Corporate groups warn that doing so would hurt UK businesses at a time when they can least afford it due to the coronavirus crisis.
Mr Johnson said what the EU would expect from the UK in key negotiating areas was "totally unacceptable".
"From the start, it was very clear to us that we wanted nothing more complicated than a Canadian-style relationship based on friendship and free trade," he said.
Judging by the recent EU summit in Brussels, that will not work for our EU partners.
“They still want the ability to control our legislative freedom and our fisheries in ways that are totally unacceptable to an independent country.
“And since we only have 10 weeks until the end of the transition period on January 1st, I have to make a judgment about the likely outcome and get us all ready.
"Given that they have largely refused to negotiate seriously in recent months, and given that this summit seems to be expressly ruling out any Canadian-style deal, I have come to the conclusion that we are looking at agreements which are more like Australia's, should prepare for January 1st. " based on simple principles of global free trade. & # 39;
The Prime Minister's official spokesman went further and said, “The trade talks are over. The EU effectively ended it by saying that it does not want to change its negotiating position.
"The EU can either fundamentally change its position or we can leave on Australian terms."
The spokesman added: “There is no point in Michel Barnier coming to London next week when he is ready to discuss all issues faster on the basis of legal texts, without Britain having to take all the steps or when he is ready To discuss the practicality of areas such as travel and transportation that the Prime Minister mentioned in his statement. "
Brexit Party leader Nigel Farage appeared to welcome Mr Johnson's comments as he tweeted, “A Canadian-style deal has always been impossible in the face of the withdrawal deal. Boris now reaches the right solution. & # 39;
However, Remain activists reacted with anger when the Best for Britain group said: "The EU has not given up the idea of a free trade agreement with us and it would be the Prime Minister's decision to break off these talks."
The group said: “The EU has indicated its desire to continue talks. To leave now would be a terrible game with the future of the country. & # 39;
The Liberal Democrats said Mr Johnson & # 39;reckless comments are just further evidence of the prime minister's incompetence.We cannot afford to leave the EU without making an agreement or accepting a rash, bad deal. "
Mr Johnson's comments significantly aggravated Britain's stance after Lord Frost declared the response agreed by Brussels last night as "unusual".
He tweeted: “Disappointed with the conclusions of the European Council on the UK-EU negotiations.
"(I am) surprised that the EU is no longer working" intensively "to achieve a future partnership, as agreed on October 3rd with the President of the European Commission, Ursula von der Leyen.
& # 39; Also surprised by the suggestion that all future steps must come from the UK in order to reach an agreement. It's an unusual approach to negotiating. & # 39;
In a call with Ms von der Leyen and the President of the European Council, Charles Michel, on the eve of the summit, Mr Johnson said he was "disappointed" that the talks had made no further progress.
However, there is still skepticism in Brussels that Mr Johnson will actually fulfill his threat to end the negotiations.
Dutch Prime Minister Mark Rutte seemed to mock his counterpart yesterday when he said: "Britain has already imposed so many deadlines that came and went."
Meanwhile, Michel said at a press conference that Brussels would decide in the coming days, based on Britain's next proposals, whether a deal was possible.
Emmanuel Macron said he will not allow French fishermen to be "sacrificed" to Brexit as he stuck to his red negotiating line on access to British waters
This map shows the extent of the UK's Exclusive Economic Zone – the waters that Britain will regain control of after Brexit. Currently, the EEZ of each EU Member State is grouped into one large zone accessible to fishermen from across Europe.
Why the complex issue of fishing rights between the UK and the EU is shaking the Brexit talks in cold water
Each country has an exclusive economic zone that can extend up to 200 nautical miles from the coast.
This country has special fishing rights in this area.
In the EU, however, each country's exclusive economic zone is effectively amalgamated into a common EU zone.
All fishing activities in this zone are then regulated by the bloc's controversial Common Fisheries Policy, which dictates how many species of fish of each species can be caught.
The common EU zone is open to fishermen from all Member States.
However, after the transition to Brexit, the UK will regain sole control of its exclusive economic zone and will be able to decide which countries can fish there and how much they can catch.
"We are sure that we are determined to negotiate, we are determined to reach an agreement, but we know there are some difficult issues," he said.
“This certainly applies to fisheries, as well as a level playing field and governance.
"We agree and will do an evaluation in the next few days. We will see if it is possible to conclude a negotiation on what the country (UK) proposal will be and on that basis we will make an evaluation."
Both sides want an agreement to be agreed before winter so that it can be ratified and implemented before the end of the transition period.
If no agreement is reached, the UK will start trading with the bloc from January 2021 on World Trade Organization terms.
The government has repeatedly described this approach as an Australian-style arrangement, but critics insist that this is just another way of saying that there will be no trade deal.
The UK and EU have recognized that the issue of fishing rights remains one of the most difficult issues to resolve after Brexit.
French President Emmanuel Macron, under pressure from fishermen in his country who fear losing access to British waters, held on to his hard line yesterday.
"Under no circumstances should our fishermen be sacrificed for Brexit," he said.
“If these conditions aren't met, we may not have a deal. If at the end of these discussions the right terms cannot be found, we are ready for a no-deal for our future relationships. & # 39;
Foreign Minister Dominic Raab today called on the EU to show more "flexibility".
He told BBC Radio 4's Today program: "A deal has to be made, but there has to be flexibility on both sides, energy and goodwill and political will on both sides, and the Prime Minister will say more (today)."
He said the government was "surprised by the attitude and disposition" of the European Council.
He added: "I am surprised and disappointed at the lack of flexibility and will that at least seems to have emerged from the European Council."
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