• Bloomberg


The U.K. is stepping up preparations for Brexit trade talks to fail, as time runs out for reaching a deal.

Boris Johnson will tell the European Union on Monday he’s willing to walk away rather than compromise on what he sees as the core principles of Brexit, setting an Oct. 15 deadline for a deal even as U.K. officials draft a law that risks undermining the already fragile negotiations. The pound edged lower against the euro.

His government is preparing to publish new legislation designed to dilute the legal force of the divorce deal he signed with the EU this year if outstanding issues can’t be resolved on the thorny question of Northern Ireland. The plan was first reported by the Financial Times.

The Internal Market Bill, expected to be published Wednesday, is designed to lessen the power of the Brexit withdrawal agreement on issues including state aid and customs in Northern Ireland, a person familiar with the matter said. The aim of the bill is to ensure smooth trade between the U.K.’s four nations, avoiding tariffs between Northern Ireland and the mainland after Brexit, for example.

But while officials say the draft law is only intended as a fall-back option in case talks fail, there’s a risk it will further undermine the negotiations with the EU on a future trade deal, said the person, speaking on condition of anonymity. Irish Foreign Minister Simon Coveney tweeted his disapproval of Johnson’s potential maneuver.

Crunch talks

The developments came as both sides prepared for a crucial round of talks in London this week that seem unlikely to deliver a breakthrough. The U.K. is due to leave the EU single market and customs union when the Brexit transition agreement expires at the end of December. If a new deal isn’t struck, U.K.-EU trade is likely to be hit by chaotic scenes of long queues at the border and costly new tariffs on goods.

Yet for Johnson, who led the pro-Brexit campaign in 2016, a bad deal would be worse than no deal. On Monday, he’ll say the U.K. is prepared to leave the transition period without an agreement — a scenario he’ll describe as a “good outcome,” his office said in an emailed statement.

“There is still an agreement to be had,” Johnson will say, pledging that his government will work hard through September and urging the bloc to “rethink” its positions. “But we cannot and will not compromise on the fundamentals of what it means to be an independent country to get it.”

A European diplomat, who asked not to be named in line with policy, said informal consultations ahead of this week’s talks yielded no shift in positions. A second diplomat said the view in Brussels is that there’s a fight between Brexit realists and Brexit ideologues in the British government, and it’s uncertain which side will prevail.

Lengthy impasse

The U.K. will revert to trading with its biggest market on terms set by the World Trade Organization if there’s no agreement in place by Dec. 31. That means the return of certain tariffs and quotas, as well as extra paperwork for businesses. Though the British government describes that as an “Australia-style” agreement, it’s an outcome feared by British businesses who warn of severe disruptions to vital just-in-time supply chains.

Johnson will say that in the absence of a deal, the U.K. will be “ready to find sensible accommodations on practical issues,” including aviation, haulage and scientific cooperation, according to his office.

The two sides have been at an impasse for months over state aid and fisheries. The EU is seeking to keep the access its fisherman currently have to U.K. waters to protect jobs and coastal communities, while Britain wants reduced access for EU boats and to make it conditional on regular negotiations.

British Prime Minister Boris Johnson attends the Prime Minister's Questions in the House of Commons in London on Wednesday. | U.K. PARLIAMENT / VIA AFP-JIJI
British Prime Minister Boris Johnson attends the Prime Minister’s Questions in the House of Commons in London on Wednesday. | U.K. PARLIAMENT / VIA AFP-JIJI

On state aid, or so-called level playing field regulations, Johnson’s government wants the freedom to chart its own course, while the EU is demanding to know what the British government plans to ensure fair competition.

Negotiators have scheduled eight hours of talks on both issues this week, according to an agenda published Friday.

On Sunday, Foreign Secretary Dominic Raab accused the bloc of trying to undermine the U.K.’s Brexit decision by keeping it bound to the rules of the EU’s single market.

‘Point of principle’

“This week is an important moment for the EU to really effectively recognize that those two points of principles are not something we can just haggle away — they are the very reasons we are leaving the EU,” Raab told Sky News. He said the issue of state aid is a “point of principle” for the U.K. rather than an indication the government is preparing major interventions.

“I don’t think the EU should be worried about that,” he said.

There’s pessimism in Brussels about the prospects of a breakthrough, and for now, Brexit isn’t on the agenda of the Sept. 24 EU summit.

Michel Barnier, the bloc’s top negotiator, said last week he was “worried” and “disappointed” by the current state of the talks, saying Britain would need to shift its position to reach an agreement.

The EU also hit back at reports in the British media that Barnier is being sidelined in an attempt to push forward a trade agreement, calling them “unfounded rumors.”

“Whoever wants to engage with the EU on Brexit needs to engage with Michel Barnier,” Sebastian Fischer, a Brussels-based spokesman for the German government, whose country holds the EU presidency, said in a tweet over the weekend.

The two sides are even at loggerheads on how to negotiate, with the EU demanding progress on all issues and the U.K. seeking initial agreements on less contentious points to build momentum toward a final deal.


Ahead of the meetings, the U.K.’s chief negotiator, David Frost, warned that his side would “not blink,” and contrasted Johnson’s steadfast approach with that of his predecessor, Theresa May. British officials have also repeatedly complained about the EU’s position.

“A lot of what we are trying to do this year is to get them to realize that we mean what we say and they should take our position seriously,” Frost said in an interview with the Mail on Sunday.

The standoff comes amid warnings from British businesses, particularly the haulage industry, about the U.K.’s ability to mitigate disruption at ports.

Raab told the BBC on Sunday that earlier planning for a no-deal Brexit and the measures put in place during the coronavirus pandemic have put the U.K. “in a much stronger place” to handle the risks. “But we’d much rather have a deal with the EU.”

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