Leaving the EU on “Australia terms” will mean a no-deal Brexit, Downing Street has admitted for the first time – while insisting the UK would still “prosper”.
Ministers have repeatedly talked up a so-called “Australia-style” deal – despite the spending watchdog warning it would slash 2 per cent from GDP next year alone.
Asked what it meant in reality, Mr Johnson’s official spokesman said: “As a matter of fact, Australia does not have a comprehensive free trade agreement with the EU.
“So the bulk of their trade is done according to WTO terms. So, Australia terms would mean that the UK would trade with the EU under WTO terms, based on the principles of free trade.”
The comments came as the spokesman rejected Michel Barnier’s warning that the final deadline for averting a crash-out Brexit is Wednesday, as he delivered a “gloomy” summary of the status of the talks.
“Time is obviously now in very short supply, and we are in the final stages, but we are prepared to negotiate for as long as we have time available if we think an agreement is still possible,” No 10 insisted.
Mr Johnson and Ursula von der Leyen, the European Commission president, were due to hold make-or-break talks at 4pm, to try to overcome the obstacles to an agreement.
Both sides agree they remain far apart on the crunch disputes of fishing rights, fair competition rules – to prevent the UK undercutting the EU – and how to resolve future violations.
Claims of a deal being close on fishing have been rejected, but Mr Barnier, the UK’s chief negotiator, is believed to have said that the so-called ‘level playing field’ rules are the biggest stumbling block.
A crash-out Brexit would delay the UK’s recovery from the Covid-19 pandemic by a further year, the Office for Budget Responsibility warned last month.
Downing Street also accepted that food prices will rise if the UK leaves the post-Brexit transition period – and therefore the single market and customs union – without a trade deal agreement.
The spokesman agreed with George Eustice, the Environment Secretary, that these would be greatest on products such as beef and pork.
However, he insisted the UK would not continue trade talks next year, if they failed this year, and ruled out any extension of the transition period.
If a trade agreement proved impossible, “we will leave on Australian terms and we will prosper”, the spokesman insisted.
