Johnson: ‘Very Possible’ Brexit Negotiations Fail

UK Prime Minister Boris Johnson is warning businesses and the public to prepare to leave the European Union single market without a trade deal as negotiations with the bloc fail.

Speaking a day after crisis talks with European Commission President Ursula von der Leyen ended without a breakthrough, Johnson said Britain will continue to seek a deal. But he warned that the bloc’s demand that the UK follow future changes to EU rules is hampering negotiations.

“Now there is a strong possibility that we have a solution that looks more like an Australian relationship with the EU than a Canadian relationship with the EU,” Johnson said in a joint television interview on Thursday.

“Looking at where we are, I think it’s vital that everyone is prepared now for that Australian option,” he said. Under that option, the UK would fall back to the World Trade Organization rules and face both tariffs and quotas. .

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The pound extended its decline. Johnson’s intervention couldn’t come at a more delicate time as EU leaders meet in Brussels after rejecting a threat from Hungary and Poland to block a $ 2.2 trillion stimulus package.

Sour atmosphere

With the mood in the Brexit negotiating room suddenly turning pessimistic, any deal with the UK is now likely to depend on a last-minute intervention from German Chancellor Angela Merkel or Frenchman Emmanuel Macron. The two are in the middle of an EU summit in Brussels.

An EU official close to the Brexit discussions said Johnson’s words are more conciliatory than they might appear at first glance: The prime minister could have chosen to end the negotiations, but did not.

Another official in Brussels played down the prime minister’s statement, saying it came as no surprise and that leaders have other things to talk about.

The negotiations have long been plagued by disagreements over the EU’s right to fish in British waters and the so-called level playing field rules for fair competition for companies. There is still no sign of how differences on the issue of fair competition can be bridged, an EU official said earlier in the day.

Johnson argues that, for sovereignty reasons, Britain should not be forced to follow the EU’s competition rules as they evolve in the coming years.

The EU demand “basically means that whatever new law they introduce, we will have to follow it or we will face punishment,” Johnson said. “Clearly, that is not a sensible way to proceed.”

The EU says the UK must keep up with its changing regulations to protect the integrity of the bloc’s single market. Both sides have realized that it may be impossible to reach a compromise, the EU official said.

Failure to reach an agreement after nine months of negotiations would deal a major blow to the British economy and disrupt business supply chains in both the UK and the EU.

Consumers would be hit by additional costs and disruptions as tariffs and quotas are imposed on trade with the UK’s largest and closest trading partner.

– Bloomberg