PM tells businesses to get ready after failed EU summit this week

The prime minister has told the UK to prepare for a 鈥榥o deal鈥� exit from the EU, after EU leaders this week rejected British demands they compromise to secure a free trade agreement.

In recorded comments broadcast on the BBC and Sky News, Boris Johnson (pictured) said that the EU鈥檚 decision at a summit yesterday (Thursday) effectively meant it had ruled out a 鈥楥anada-style鈥� free trade deal, and he had therefore concluded that the UK should get ready for an 鈥楢ustralia-style鈥� outcome.

COBRA Boris

Australia has no trade deal with the EU and trades with the bloc on World Trade Organisation terms.

The news is likely to come as a blow to the industry鈥檚 hopes of a rapid recovery from the economic damage inflicted by the covid-19 pandemic.

Johnson said he was only open to returning to talks with the EU if there was a 鈥渇undamental change of approach鈥� from it.

He said the EU had refused to negotiate seriously for much of the last few months and said: 鈥淕iven that this summit appears explicitly to rule out a Canada-style deal, I鈥檝e concluded that we should get ready for 1 January with arrangements that are more like Australia鈥檚, based on simple principles of global free trade.

鈥淎nd so now is the time for our businesses to get ready and for our hauliers to get ready, for travellers to get ready.鈥�

He said the UK should face the challenge of no deal with 鈥渉igh hearts鈥� and 鈥渃omplete confidence鈥�.

An analysis by the London School of Economics released last month suggested that a 鈥渘o deal鈥� exit from the EU was likely to cause two or three times the economic damage of the coronavirus crisis over the long term.

The LSE said a no-deal exit from the EU would cause a 8% hit to UK GDP, similar to the government鈥檚 own forecast of 7.6% made in 2018, equivalent to a cost of around 拢160bn, or 拢2,400 per person. However, it said the impact would not be immediate.

Last September, Johnson described a no deal exit from the EU as a 鈥渇ailure of statecraft for which we would all be responsible鈥�, and campaigned in the 2019 election on the basis that the trade deal with the EU was 鈥渙ven-ready鈥�.

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