No-deal Brexit still possible, EU's Michel Barnier warns

Chief negotiator says no-deal could happen in March 2020 or December 2020 as things stand

European Union's chief Brexit negotiator Michel Barnier speaks during a meeting of the European Economic and Social Committee (EPA)

A no-deal Brexit is not yet off the table and there is still a risk of the UK crashing out of the EU, Michel Barnier has said.

Speaking on Wednesday with the UK heading for a general election, the EU’s chief negotiator also warned that future trade talks would be “difficult and demanding”.

“The risk of Brexit happening without a ratified deal still exists. We still need to prepare,” Mr Barnier said during a speech in Brussels.

He warned that there was a “big difference” in no-deal preparedness “in all member states”, particularly between larger companies and smaller companies – who he said could be vulnerable.

“It’s not time to become complacent. Work with SMEs in particular needs to continue,” he added.

Mr Barnier said a no-deal exit could happen at the end of January, if the newly elected UK parliament failed to ratify Mr Johnson’s deal and there was no further call for an Article 50 extension.

He also highlighted that a no-deal could happen at the end of 2020 if the UK government did not agree to extend the transition period and no free trade agreement (FTA) had been struck by then.

Most trade observers believe the idea, endorsed by Downing Street, that an FTA could be negotiated in such a short space of time is wildly optimistic and close to impossible.

“It will be a difficult and demanding set of negotiations,” he said. “The time we have at hand to conclude this negotiation will be extremely short, 11 months.

“Because of our geographic closeness and our economic independence... we want to have solid guarantees on the level-playing field aspects.”

He warned that the bloc would be “extremely vigilant on ... social rights, environmental protection, state aid and obviously on issues of taxation” – stipulations Mr Johnson has been less willing to accept than his predecessor Theresa May.

He concluded: “Brexit is not a destination. It’s not an end in itself, at least not for us. It’s a staging post, it’s difficult juncture. But after Brexit... we will need to reestablish all sorts of things.”