MICHEL Barnier has accused the UK Government of backsliding over it pledges on Brexit, warning it could lead to the EU denying the UK a trade deal.

The EU’s chief Brexit negotiator said Boris Johnson risked compounding the Covid recession with a Brexit-related blow to the economy, as there would not be an “agreement at any cost”.

Mr Barnier played hardball ahead of this week’s fourth round of stalemated EU-UK talks and as the July 1 deadline for extending the negotiations approaches.

Downing Street insists the timetable will not be extended, meaning the UK could leave the EU on World Trade Organisation (WTO) terms at the end of the year.

The EU wants a level playing field on environmental, social and Labour standards, as well as EU access to UK fishing waters, while the UK Government wants to diverge in order to strike its own trade deals with other countries.

In an interview in the Sunday Times, Mr Barnier said: “The UK has been taking a step back - two steps back, three steps back - from the original commitments.

“The UK negotiators need to be fully in line with what the Prime Minister signed-up to with us.”

He said the 27 EU leaders remembered the text negotiated with Mr Johnson “very clearly” and wanted it complied with “to the letter... and if that doesn’t happen there will be no agreement”.

Mr Barnier also insisted UK withdrawal from the EU was a “lose-lose” for both sides, saying no-one - not even Nigel Farage - had shown there was any “added value” to the UK’s departure.

He said, therefore, the natural next step in trade negotiations was “damage limitation”, and if no agreement were reached that would result in “even more consequences” at the worst time possible, given the coronavirus pandemic.

“We have a joint responsibility in this very serious crisis, which affects so many families... with so many deaths, so many sick people, so many people unemployed... to do everything we can to reach an agreement and I very much hope that we will do so,” he said.

A report from the Social Market Foundation yesterday predicted severe economic disruption in Scotland if the UK left the EU without a deal on WTO terms.

It suggested Falkirk, West Lothian and Edinburgh would suffer most if Brexit compounded the coronavirus recession because more than a quarter of local jobs are in the exposed manufacturing, banking, and finance sectors, with Edinburgh having 70,000 such jobs.

Naomi Smith, CEO of Best for Britain, said: “This report definitively rebuts any speculation that the impact of leaving the transition period could be masked by the coronavirus recession.

“The data is clear: when you scratch beneath the surface, so many key sectors and local areas in Scotland will be exposed to a dangerous double whammy of economic hits.

“With public debt spiralling, the Government is boxing itself into a fiscal corner unless it extends the transition period and secures a trade deal at the end of the ongoing negotiations.”

SNP MP Dr Philippa Whitford added: “Time is now fast running out to agree an extension to the Brexit transition period to protect the economy, businesses and people’s livelihoods from another economic body blow.

“We are in the midst of a health pandemic and businesses are already struggling to survive. They simply do not have the ability to also prepare for a hard or No-Deal Brexit in just a few months’ time.

“Rather than ploughing ahead with its reckless Brexit obsession, the Tory government must step back from the brink and prioritise people’s safety, their livelihoods and the economy.

“It is vital the Prime Minister grabs the lifeline of an extension to the transition period so that efforts can be fully focussed on tackling the biggest health and economic crisis of our time.”

The House of Lords European Union committee today warns of Brexit uncertainty posing a “potent threat” to the prosperity stability in Northern Ireland.

The peers said businesses in Great Britain could pull out of their NI operations unless there was greater flexibility in the EU negotiations.

The already Herculean task of preparing to new protocols had become “become even more difficult” with Covid-19 now leaving some firms struggling to cope.