Video report by ITV News Political Correspondent Libby Wiener
Boris Johnson has warned that a no-deal outcome from negotiations with the EU is now "very, very likely", and that the UK will leave the bloc on World Trade Organisation terms.
The prime minister said he remains "hopeful", with his negotiators "continuing" trade talks in Brussels, but said he's yet to see any substantial change in the EU's negotiating position.
Since his comments, Mr Johnson has chaired a meeting, attended by Cabinet Office minister Michael Gove and other senior officials, to “take stock” of government plans for a no-deal exit, Number 10 confirmed.
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He told reporters: "From where I stand now, here in Blyth, it is looking very, very likely that we will have to go for a solution that I think would be wonderful for the UK, and we'd be able to do exactly what we want from January 1.
"It obviously would be different from what we'd set out to achieve but I have no doubt this country can get ready and, as I say, come out on World Trade terms."
Mr Johnson and EU chief Ursula von der Leyen have said their chief negotiators have until Sunday to reach an agreement on the sticking points of the so-called level-playing-field, fisheries and governance of the deal.
If no consensus can be found by Sunday then the pair have agreed that negotiations should go no further and both sides should prepare for no-deal.
During his visit to Blyth, Northumberland, Mr Johnson added: "If there is a big offer, a big change in what they are saying then I must say that I've yet to see it.
"Unfortunately, at the moment, as you know, there are two key things where we just can't seem to make progress and that's this kind of ratchet clause they've got in to keep the UK locked in to whatever they want to do in terms of legislation, which obviously doesn't work.
Brexit trade talks - the sticking points at a glance:
- Fishing rights: The UK wants total control over its own fishing waters after the Brexit transition period ends, with a 12 mile exclusion zone around the British Isles banning all foreign vessels. The EU wants the UK to stick to the Common Fisheries Policy, an EU agreement which gives member nations the rights to fish in European waters - more here.
- Level Playing Field: This is a concept all EU nations agree to, which ensures member nations cannot undercut others by setting their own rules on issues such as the environment, taxation and state aid. The EU says a zero-tariff trade deal is dependent on the UK agreeing to a level playing field. The UK disagrees, saying a fundamental aspect of Brexit is that the UK will be able to set its own rules.
- Governance of a deal: It's likely that any trade deal will eventually result in disputes. The EU wants the European Court of Justice to be the final authority in ruling over disputes. The UK says the ECJ should have no role and final decisions should be made by a bespoke arbiter.
But the statements from both sides suggested that while further discussions would be held, substantial movement on the key issues had not been made.
"And then there is the whole issue of fish where we've got to be able to take back control of our waters. So there is a way to go - we're hopeful that progress can be made."
European Commission President von der Leyen said gaps remained on fishing rights and the level-playing field measures aimed at preventing the UK undercutting the EU on standards and state subsidies.
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But she said the UK would be "free" to decide whether to follow suit each time the EU changes its regulations, though if it refused, the bloc would adapt the conditions for access to its markets.
She said: "On the level-playing field, we have repeatedly made clear to our UK partners that the principle of fair competition is a pre-condition to privileged access to the EU market.
"It is the largest single market in the world and it is only fair that competitors to our own enterprises face the same conditions on our own market.
"But, this is not to say that we would require the UK to follow us every time we decide to raise our level of ambition, for example in the environmental field.
"They would remain free, sovereign if you wish, to decide what they want to do. We would simply adapt the conditions for access to our market according to the decision of the United Kingdom, and this would apply vice versa."
On fisheries, Mrs von der Leyen said the UK and EU have "not yet found the solutions to bridge our differences" and urged the Government to "understand the legitimate expectations of EU fishing fleets built on decades, and sometimes centuries, of access".
"On these and other points, our negotiators are working. We will decide on Sunday whether we have the conditions for an agreement or not."
And she added: "One way or the other, in less than three weeks it will be new beginnings for old friends."
Her comments came after Prime Minister Johnson warned there is a "strong possibility" the UK will fail to broker a trade agreement and told the nation to prepare for no-deal at the end of the transition period this month.
He said current proposals would keep the nation "kind of locked in the EU's orbit" and warned there was a "strong possibility" that the UK would fail to strike a deal.
He insisted negotiators would "go the extra mile" in trying to get a treaty in time for December 31 - and said he would be willing to return to Brussels, or head to Paris or Berlin, to get a deal over the line.
Mr Johnson told his Cabinet on Thursday to "get on and make those preparations" for a departure on terms like Australia's, which does not have a trade deal with Europe, unlike Canada.
"I do think we need to be very, very clear, there is now a strong possibility - a strong possibility - that we will have a solution that is much more like an Australian relationship with the EU than a Canadian relationship with the EU," he said.