The UK will be prepared for “all possible scenarios” following reports that they are working on the assumption that they will fail to reach a deal in post-Brexit trade talks. 

Significant differences remain in talks on a post-Brexit free trade agreement (FTA) with the European Union and the UK, however, Downing Street has said that they remain prepared for all scenarios when the current arrangements expire at the end of the year, Downing Street said.

The latest round of negotiations between teams led by the EU’s Michel Barnier and Boris Johnson’s Europe adviser David Frost took place today with discussions expected to conclude on Thursday.

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Key stumbling blocks throughout the process have included fishing rights and the “level playing field” provisions that Brussels wants to prevent the UK undercutting European rivals by cutting workers’ rights and environmental protections and through the use of state subsidies.

The UK has insisted it is committed to high standards and claims that the EU is insisting on restrictions which it has not applied in other free trade agreements (FTAs).

The Prime Minister’s official spokesman said: “Round five negotiations are ongoing and we remain committed to working hard to finding the outlines of a balanced agreement.

“We have been clear that discussions throughout this intensified process have continued to be constructive but significant differences still remain on a number of important issues.

“Our preference is to leave with an FTA as long as it guarantees our political and economic independence.

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“But we will make sure that we are prepared for all possibles scenarios.”

Number 10 played down the prospect of an imminent collapse in negotiations, following reports that the Government’s working assumption is that Britain will trade with Europe on World Trade Organisation terms – without a UK-EU deal – after the transition period ends on December 31.