• If the two sides can't reach a deal by Dec. 31, trade relations between the U.K. and EU will revert to terms of WTO
  • UK wants to see concrete progress on talks by Oct. 15 or it may pull out
  • Boris Johnson said he wants a trade deal, but could live without one

The European Union would rather let talks on Britain’s departure from the bloc fail rather than cave into any of the demands of U.K. Prime Minister Boris Johnson. As a result, the chances of a no-deal Brexit become ever more likely.

Only a little more than a week ahead of U.K.'s self-imposed deadline of Oct. 15 for Brexit talks to achieve some concrete progress, Bloomberg reported, senior EU officials are prepared instead to let negotiations drag into December.

If the two sides cannot reach a pact by Dec. 31, the trade relations between the U.K. and EU will revert to terms of the World Trade Organization – meaning the imposition of various quotas and tariffs.

For now, the EU said it does not recognize the Oct. 15 “deadline” – the first day of the next EU-U.K. summit – nor will it abide by any of Johnson’s trade demands.

Among the many disagreements between London and Brussels are questions over the EU’s access to the U.K.’s fishing waters and refusals by Johnson to adhere to EU’s rules on providing state aid. As a member of the EU, the U.K. was prohibited from giving government money to local companies if such assistance “distorts or threatens to distort competition” by favoring certain firms over others in other countries.

If Johnson breaks off talks for lack of progress – as he has threatened – thousands of British-based businesses will be thrust into an unknown void in terms of their relations with European customers and suppliers. However, if Johnson is only bluffing, Britain’s position in the talks will have been weakened.

Bloomberg noted that the EU actually would like to see Johnson take a greater direct role in the negotiations rather than just his delegate, chief Brexit negotiator, Lord David Frost, and his team.

Johnson has only spoken directly with one major European head of state, French President Emmanuel Macron, since Brexit talks commenced in March.

After the last round of talks failed to reach an agreement, Frost warned: "I am concerned that there is very little time now to resolve these issues ahead of the European Council [EU summit] on October 15."

However, German Chancellor Angela Merkel – perhaps the most powerful and influential person in Europe – insisting she was "optimistic" that a Brexit deal can still be reached but added that "a lot will depend on what Britain wants."

Other EU officials are far less sanguine.

European Commission Vice President Maros Sefcovic warned the European Parliament on Tuesday that “time is short” to reach a Brexit deal – specifically blaming Johnson.

The EU considers the IMB – which will likely become law in the U.K. – a breach of international laws because it will lift all trade barriers within the U.K., which includes Northern Ireland, which shares a border with EU member Ireland.

Moreover, under IMB, when the U.K. finally leaves the EU, the regions within Britain – England, Wales, Scotland and Northern Ireland – will be able to implement their own rules and standards on goods and services (rather than common EU standards). But IMB will make sure that trade within the U.K. will not be hampered. For example, under IMB, goods that meet the standards in, say, Scotland, can be sold in England, Wales or Northern Ireland – even if such goods do not meet local requirements.

The EU is also upset that IBM will violate parts of the withdrawal agreement with respect to Northern Ireland.

Under terms of the so-called “Northern Ireland Protocol” (which was negotiated earlier by Johnson and the EU), Northern Ireland would continue to enforce the EU's rules on customs and product standards since it shares a border with Ireland. (The EU has since launched a legal challenge against Britain over the matter)

“The full and timely implementation of the withdrawal agreement is simply not debatable,” Sefcovic told the European Parliament.

Germany’s Foreign Minister, Heiko Maas, also criticized the British government, citing that a no-deal Brexit would be "irresponsible.”

"With today's health and economic challenges, people on both sides of the [English] channel have enough to shoulder, so it would be totally irresponsible to burden them in this position with the additional problems through a no-deal," Maas said, reported Deutsche Welle. "Our door is still open for a close and ambitious partnership with Britain.”

But Goldman Sachs reported on Monday that it expects a Brexit deal will be reached by early November.

"Our core view remains that a 'thin' zero-tariff/zero-quota trade agreement will likely be struck by early November, and subsequently ratified by the end of December," Goldman analysts said in a report. "The risk of a breakdown in negotiations cannot be ruled out. We continue to think the perceived probability of a 'no deal' will persist beyond the next European Council meeting in mid-October."

Johnson himself recently said that while he would like to see a Brexit deal accomplished, he could also be happy without one.

“I think [a deal is] there to be done,” Johnson told BBC television on Sunday. “Alas, there are some difficult issues that need to be fixed, and there’s no question that the EU needs to understand that we’re utterly serious about needing to control our own laws and our own regulations, and similarly they need to understand that the repatriation of the U.K.’s fisheries ... is very important.”