Boris Johnson’s suggestion that Britain could trade with the EU on the same terms as Australia would amount to a no-deal, the president of the European Commission has said.

Ursula von der Leyen said she was “surprised” to hear the prime minister propose an “Australian-style” Brexit because “the European Union does not have a trade agreement with Australia”.

Mr Johnson made the comments in a speech last week where he rejected suggestions the UK could align to EU rules to gain more market access – the bloc’s key requirement.

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“Honestly, I was a little bit surprised to hear the prime minister of the United Kingdom speak about the Australian model,” Ms von der Leyen said during a debate in the European Parliament on Tuesday.

“Australia, without any doubt, is a strong and a like-minded partner, but the European Union does not have a trade agreement with Australia.”

The head of the EU’s executive branch said that if the UK wanted to leave without a deal, the bloc was “fine with that”, however. 

“We are currently trading on WTO terms and if this is the British choice, well, we are fine with that, without any question,” she said.

“Of course the UK can decide to settle for less, but I personally believe that we should be way more ambitious.”

Mr Johnson has set himself a deadline of the end of this year to negotiate a trade deal with the EU. If one is not secured, the UK will crash out of the transition period and trade on WTO terms, with British businesses facing high tariffs and quotas for trade.

Two key battlegrounds are emerging in the early stages of talks: the extent to which the UK guarantees it will play by EU rules on a “level playingfield” when it trades, and the extent to which the European Court of Justice will oversee the agreement.

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The EU also wants fishing rights for its fleets in British waters, while the UK wants access for its financial services firms to European markets.

On Tuesday the chancellor Sajid Javid said he wanted a “reliable equivalence process” for financial services rules on which “a durable relationship” can be built with the EU.

But Michel Barnier, the EU’s chief negotiator who was also speaking in the parliamentary debate, knocked back the chancellor’s demands, stating: “I’d like to make it clear to certain people in the UK in authority that they shouldn’t kid themselves. There will not be general, open-ended, ongoing equivalence in financial services. We’ll retain a free hand to take our own decisions.”

He said the bloc would simply not negotiate with the UK on this issue. As a result of Britain’s departure from the EU, City firms will lose their automatic “passporting” rights to keep doing business on the continent.

Mr Barnier added that “the opening of our markets, access to data, and equivalencies for financial services will be proportional to the commitments made to meet a true level playingfield” in the UK staying tied to EU regulations.

It comes amid reports that member states are pushing the Commission to toughen up conditions on Britain even further, requiring it to stay aligned with new EU rules after it leaves.

Shape Created with Sketch.
Brexit day: UK says goodbye to EU

Shape Created with Sketch.
Brexit day: UK says goodbye to EU

A message projected onto the White Cliffs of Dover
Big Ben, shows the hands at eleven o’clock at night
Nigel Farage speaks to pro-Brexit supporters
Pro-Brexit demonstrators celebrate on Parliament Square
The Union flag is taken down outside the European Parliament in Brussels
Pro-EU campaigners outside the Scottish Parliament, Edinburgh
A pro-Brexit supporter jumps on an EU flag in Parliament Square
EU Council staff removed the Union Jack-British flag from the European Council in Brussels, Belgium
A pro-Brexit supporter pours beer onto an EU flag
Pedestrians pass in front of the Ministry of Defence Building on Whitehall, illuminated by red, white and blue lights in central London
A Brexit supporter shouts during a rally in London
Pro-EU campaigners outside the Scottish Parliament, Edinburgh
Pro-EU campaigners take part in a ‘Missing EU Already’ rally outside the Scottish Parliament, Edinburgh
A large pro-EU banner is projected onto Ramsgate cliff in Kent
Pro-EU supporters light candles in Smith Square in Westminster
A man waves Union flags from a small car as he drives past Brexit supporters gathering in Parliament Square
The five-year old Elisa Saemann, left, and her seven-year old sister Katie hold a placard during a rally by anti-Brexit protesters outside the Scottish parliament in Edinburgh
Pro Europe supporters gather on Brexit day near the British embassy in Berlin, Germany
Anti-Brexit protester hugs a man while holding a placard
A decorated, old fashioned fire pump in Parliament Square
Pro Brexit Elvis impersonator performs at Parliament Square
An anti-Brexiteers stands with his dog in Parliament Square
Paddy from Bournemouth wears Union colours as he sits next to an EU flag decorated bag in Parliament Square
A pro-EU activist plays a guitar decorated with the EU flag during a protest organised by civil rights group New Europeans outside Europe House, central London
People celebrate Britain leaving the EU
A Pro Brexit supporter has a Union Jack painted onto his face at Parliament Square
Men hold placards celebrating Britain leaving the EU
Pro Brexit supporters dance in the street draped with Union Jack flags at Parliament Square
An anti-Brexit demonstrator spreads his wings during a gathering near Downing Street
Pro EU supporters display a banner ‘ Here to Stay, Here to Fight, Migrants In, Tories Out’ from Westminster bridge
Pro-Brexit supporters burn European Union flags at Parliament Square
A man poses for a picture on Parliament Square in a ‘Brexit Day’ t-shirt
People celebrate Britain leaving the EU
A man wears a pro-Brexit t-shirt
Anti-Brexit demonstrators visit Europe House to give flowers to the staff on Brexit day
Pro Brexit supporter wears a novelty Union Jack top hat outside the Houses of Parliament

39/66

Customers Scott Jones and Laura Jones at the Sawmill Bar in South Elmsall, Yorkshire, where a Brexit party is being held throughout the day
A pro-Brexit demonstrator burns a European Union flag
A Brexit supports holds a sign in Parliament Square
Ann Widdecombe reacts with other members of the Brexit party as they leave en masse from the European Parliament
Anti-Brexit demonstrators in Parliament Square
Pro EU supporters let off flares from Westminster Bridge
British MEPs Jonathan Bullock, holding the Union Jack flag and Jake Pugh leave the European Parliament, in Brussels on the Brexit day
Newspapers and other souvenirs at a store, near Parliament Square
Brexit supporters hold signs in Parliament Square
Pro-EU protesters hold placards in Parliament Square
Sinn Fein leader Mary Lou McDonald with a Border Communities Against Brexit poster before its unveiling in Carrickcarnon on the Irish border
National growers organisation British Apples & Pears has renamed a British apple to EOS, the Greek goddess of dawn, to commemorate Brexit day
Pro-EU protesters hold placards in Parliament Square
Britain’s departure from the European Union was set in law on January 29, amid emotional scenes, as the bloc’s parliament voted to ratify the divorce papers. After half a century of membership and three years of tense withdrawal talks, the UK will leave the EU at midnight Brussels time (23.00 GMT) on January 31
A man poses with paintings on Parliament Square
People sporting Union Flags gather in Parliament Square
A man walks with a St. George’s flag at Westminster bridge on Brexit day
A British bulldog toy and other souvenirs at a souvenir store
British pro-brexit Members of the European Parliament leave the EU Parliament for the last time
Jonathan Bullock waves the Union Jack as he leaves the European Parliament
A message projected onto the White Cliffs of Dover
Big Ben, shows the hands at eleven o’clock at night
Nigel Farage speaks to pro-Brexit supporters
Pro-Brexit demonstrators celebrate on Parliament Square
The Union flag is taken down outside the European Parliament in Brussels
Pro-EU campaigners outside the Scottish Parliament, Edinburgh
A pro-Brexit supporter jumps on an EU flag in Parliament Square
EU Council staff removed the Union Jack-British flag from the European Council in Brussels, Belgium
A pro-Brexit supporter pours beer onto an EU flag
Pedestrians pass in front of the Ministry of Defence Building on Whitehall, illuminated by red, white and blue lights in central London
A Brexit supporter shouts during a rally in London
Pro-EU campaigners outside the Scottish Parliament, Edinburgh
Pro-EU campaigners take part in a ‘Missing EU Already’ rally outside the Scottish Parliament, Edinburgh
A large pro-EU banner is projected onto Ramsgate cliff in Kent
Pro-EU supporters light candles in Smith Square in Westminster
A man waves Union flags from a small car as he drives past Brexit supporters gathering in Parliament Square
The five-year old Elisa Saemann, left, and her seven-year old sister Katie hold a placard during a rally by anti-Brexit protesters outside the Scottish parliament in Edinburgh
Pro Europe supporters gather on Brexit day near the British embassy in Berlin, Germany
Anti-Brexit protester hugs a man while holding a placard
A decorated, old fashioned fire pump in Parliament Square
Pro Brexit Elvis impersonator performs at Parliament Square
An anti-Brexiteers stands with his dog in Parliament Square
Paddy from Bournemouth wears Union colours as he sits next to an EU flag decorated bag in Parliament Square
A pro-EU activist plays a guitar decorated with the EU flag during a protest organised by civil rights group New Europeans outside Europe House, central London
People celebrate Britain leaving the EU
A Pro Brexit supporter has a Union Jack painted onto his face at Parliament Square
Men hold placards celebrating Britain leaving the EU
Pro Brexit supporters dance in the street draped with Union Jack flags at Parliament Square
An anti-Brexit demonstrator spreads his wings during a gathering near Downing Street
Pro EU supporters display a banner ‘ Here to Stay, Here to Fight, Migrants In, Tories Out’ from Westminster bridge
Pro-Brexit supporters burn European Union flags at Parliament Square
A man poses for a picture on Parliament Square in a ‘Brexit Day’ t-shirt
People celebrate Britain leaving the EU
A man wears a pro-Brexit t-shirt
Anti-Brexit demonstrators visit Europe House to give flowers to the staff on Brexit day
Pro Brexit supporter wears a novelty Union Jack top hat outside the Houses of Parliament

39/66

Customers Scott Jones and Laura Jones at the Sawmill Bar in South Elmsall, Yorkshire, where a Brexit party is being held throughout the day
A pro-Brexit demonstrator burns a European Union flag
A Brexit supports holds a sign in Parliament Square
Ann Widdecombe reacts with other members of the Brexit party as they leave en masse from the European Parliament
Anti-Brexit demonstrators in Parliament Square
Pro EU supporters let off flares from Westminster Bridge
British MEPs Jonathan Bullock, holding the Union Jack flag and Jake Pugh leave the European Parliament, in Brussels on the Brexit day
Newspapers and other souvenirs at a store, near Parliament Square
Brexit supporters hold signs in Parliament Square
Pro-EU protesters hold placards in Parliament Square
Sinn Fein leader Mary Lou McDonald with a Border Communities Against Brexit poster before its unveiling in Carrickcarnon on the Irish border
National growers organisation British Apples & Pears has renamed a British apple to EOS, the Greek goddess of dawn, to commemorate Brexit day
Pro-EU protesters hold placards in Parliament Square
Britain’s departure from the European Union was set in law on January 29, amid emotional scenes, as the bloc’s parliament voted to ratify the divorce papers. After half a century of membership and three years of tense withdrawal talks, the UK will leave the EU at midnight Brussels time (23.00 GMT) on January 31
A man poses with paintings on Parliament Square
People sporting Union Flags gather in Parliament Square
A man walks with a St. George’s flag at Westminster bridge on Brexit day
A British bulldog toy and other souvenirs at a souvenir store
British pro-brexit Members of the European Parliament leave the EU Parliament for the last time
Jonathan Bullock waves the Union Jack as he leaves the European Parliament

Mr Johnson had said in his speech: “In the very unlikely event that we do not succeed, then our trade will have to be based on our existing withdrawal agreement with the EU.

“The choice is emphatically not ‘deal or no-deal’. The question is whether we agree a trading relationship with the EU comparable to Canada’s – or more like Australia’s.”

Under the “Australia” scenario, the UK would end up paying tariffs and having quotas imposed on its imports and exports with the EU. 

Under an agreement mirroring the Canadian deal with the EU, a relatively hard Brexit, there would also be tariffs and quotas – though fewer. The UK has also said it wants to try and negotiate a deal with zero tarrifs and quotas.

There are currently no tariffs and quotas during the transition period, under which the UK stays aligned to EU rules until the end of 2020.