U.K. plans to quit Brexit talks if no deal clear next week

Brexit negotiations are at risk of breaking down within days after the U.K. government warned it will pull out of trade talks with the European Union if there is no clear deal in sight next week.

The British pound erased most of its gains and traded little changed at $1.2891 at 3:22 p.m. in London.

Boris Johnson has said he wants the outlines of a deal to be clear by Oct. 15. EU officials, however, have said they won’t be pressured into making concessions and are prepared to call the prime minister’s bluff if he doesn’t compromise, effectively daring Johnson to walk away.

A person familiar with the British position said Johnson’s team would indeed pull the plug on talks if no clear landing zone for a deal has been identified by that date.

The analysis adds to pressure on the talks which are resuming in London Wednesday.

“While we are keen to get a deal, we will not do a deal at any price,” Cabinet Office minister Michael Gove told a House of Lords committee on Wednesday. “If it is the case that the EU insists on an intransigent approach in the weeks ahead, then very well, we will be ready for that eventuality.”

After talks between Johnson and European Commission President Ursula von der Leyen on Saturday, the two sides agreed to intensify negotiations.

But two key stumbling blocks to a deal remain—whether the U.K. will agree to apply restrictions on state subsidies in a similar way to the EU and the fishing rights for European countries in British waters.

Short of Time

Johnson will speak to European Council President Charles Michel later on Wednesday, his office said, in an attempt to unblock the negotiations.

The U.K. leader will tell Michel “he wants to work constructively and at pace to secure a deal, but he will also underline the point that time is in short supply,” Johnson’s spokesman James Slack said.

Unless there is a clear deal in sight by mid-month, Johnson has previously threatened to move on from the negotiations and prepare to exit the bloc’s single market and customs union on Dec. 31 without an agreement.

On Tuesday, a senior EU diplomat warned that the bloc had no plans to offer concessions to meet Johnson’s deadline, and would be ready to call his bluff.

Addressing those comments, the person familiar with the British position said the government was serious about walking out next week. Speaking alongside Gove to a committee in Parliament, Britain’s chief negotiator David Frost said a decision will be taken closer to Oct. 15 on whether a deal is within reach.

Working Hard

“Obviously as we approach the 15th, and it is very close already, I will have to advise the prime minister if the conditions in his statement have been met or not,” Frost said.

But Johnson is clear that the U.K.’s “door would never be closed” and even if talks on a free trade agreement fail, there will be details to finalize before the split is completed on Dec. 31.

“There are a lot of practical matters that we would need to cover—in any circumstances I would expect that to be happening,” Frost said. “My job is to work as hard as we can in the next two weeks to see if we can get an agreement in place by the 15th.”