Britain says it's walking away from talks with EU on Brexit
This week was supposed to be key for talks ahead of Jan. 1 deadline, but ultimatums have been made
U.K. Prime Minister Boris Johnson said on Friday it was now time to prepare for a no-trade deal Brexit unless the European Union fundamentally changed course, bluntly telling Brussels that there was no point in talking any more.
A tumultuous "no deal" finale to the United Kingdom's five-year Brexit crisis would sow chaos through the delicate supply chains that stretch across Britain, the EU and beyond, just as the economic hit from the coronavirus pandemic worsens.
At what was supposed to be the "Brexit summit" on Thursday, the EU delivered an ultimatum: it said it was concerned by a lack of progress and called on London to yield on key sticking points or see a rupture of ties with the bloc from Jan. 1.
"I have concluded that we should get ready for Jan. 1 with arrangements that are more like Australia's based on simple principles of global free trade," Johnson said.
"With high hearts and with complete confidence, we will prepare to embrace the alternative and we will prosper mightily as an independent free trading nation, controlling and setting our own laws."
EU heads of government, concluding a summit in Brussels on Friday, rushed to say that they wanted a trade deal and that talks would continue, though not at any price.
German Chancellor Angela Merkel, Europe's most powerful leader, said it would be best to get a deal and that compromises on both sides would be needed. French President Emmanuel Macron said Britain needed a Brexit deal more than the 27-nation EU.
Johnson's spokesman said shortly afterwards that talks were now over and there was no point in the EU's chief negotiator Michel Barnier coming to London next week barring a change in approach.
"The trade talks are over: the EU have effectively ended them by saying that they do not want to change their negotiating position," his spokesperson said.
EU wary of rhetoric
The pound oscillated to Brexit news on Friday, dropping a cent against the U.S. dollar on Johnson's remarks but then rising and then falling again on his spokesman's comments.
Johnson's brinkmanship, which follows an EU demand that London make further concessions, may push Brexit toward disorder, though he still left open the possibility that the EU could reconsider and offer Britain a better deal.
"Unless there is a fundamental change of approach, we're going to go for the Australia solution. And we should do it with great confidence," he said.
After demanding that London make further concessions for a deal, EU diplomats and officials cast Johnson's move as little more than rhetoric, portraying it as a frantic bid to secure concessions before a last-minute deal was done.
A so-called Australia deal means that the United Kingdom would trade on World Trade Organization terms: as a country without an EU trade agreement. Like Australia, tariffs would be imposed under WTO rules, likely causing significant price rises.
European Commission president Ursula von der Leyen said she was keen for a deal, though Macron was more downbeat.
"The state of our talks is not that we are stumbling over the issue of fishing, which is the British's tactical argument, but we're stumbling over everything. Everything," Macron said.
"The remaining 27 leaders of the EU, who chose to remain in the EU, are not there simply to make the British prime minister happy."
Merkel called for Britain to compromise. "This of course means that we, too, will need to make compromises," she said.
Britain formally left the EU on Jan. 31, but the two sides have been haggling over a deal that would govern trade in everything from car parts to medicines when informal membership known as the transition period ends Dec. 31.
Seeking deal similar to Canada-EU
Johnson had repeatedly asserted that his preference is for a deal but that Britain could make a success of a no-deal scenario, which would throw £900 billion ($1.5 trillion Cdn) bilateral trade into uncertainty and could snarl the border, turning the southeastern county of Kent into a vast truck park.
"We are heading into very dangerous territory," said Ian Wright, the chief executive of Britain's Food and Drink Federation. "In the event of a no-deal Brexit, shoppers will — literally — pay a heavy price."
Johnson said discussions showed the EU would not give Britain a comprehensive trade deal such as the one the bloc has with Canada.
"It does seem curious that after 45 years of our membership they can offer Canada terms they won't offer us," he said.
EU officials have said Britain, with the world's sixth-largest economy and geographically next door to Europe, poses a much bigger competitive challenge than distant Canada and so cannot be offered a similar accord.