• Video report by ITV News Political Correspondent Paul Brand

The government has said it could walk away from trade talks with the EU as early as June, if it is clear that no agreement can be found.

Setting out its negotiating stance this morning, Downing Street said that by early summer it should be obvious whether or not negotiations are worth continuing, leaving just three months to find initial agreement on key issues.

The thirty page document detailing the government's red lines states, "The Government would hope that, by that point, the broad outline of an agreement would be clear and be capable of being rapidly finalised by September.

If that does not seem to be the case at the June meeting, the Government will need to decide whether the UK's attention should move away from negotiations."

  • ITV News Political Correspondent Paul Brand explains the Government's trade stance

The UK is hoping to negotiate a trade deal with the EU based on the one that Canada has already agreed. But there is deep disagreement with Brussels over whether the UK should align its rules and regulations with the EU's.

Today's document makes clear that the UK will not sign up to the EU's idea of a "level playing field" - in other words, adopting all of the EU's rules and regulations and promising not to diverge from them.

The government said it wants a free trade agreement with the EU. Credit: PA

If this becomes a stumbling block for agreement, then the UK would quit negotiations and opt for what the government calls an "Australia-style deal" instead. Australia does not have a comprehensive free trade deal with the EU, so Britain would essentially forgo a deal in favour of setting its own independent rules.

Today the government confirmed that it is already making preparations for such an outcome, with contingency planning under way for customs and border controls.

It also promised to consult business and other groups from as early as March on the Canada-style deal it is pursuing. However, the government did not commit to publish an economic impact assessment of the proposed deal and it seems unlikely that anything will dissuade the government from its current path.