Prime minister Boris Johnson has said that the UK must be prepared for no trade deal with the EU by January 1. 

Accusing Brussels of “refusing to negotiate” and having “abandoned” talks, he said in a statement on Friday that the “Canada-style trade deal” the UK wants “won’t work” and the UK may go for the “Australia solution”.  

Despite deadlock between the two sides in Brussels this week, Johnson left open the possibility of further talks, suggesting if there was a “fundamental change in approach” from the EU, UK negotiators would return to the table. 

It comes as EU leaders, including German chancellor Angela Merkel, urge the UK to continue trade talks. 

The country’s economy faces a cliff edge when the transition period, during which the country remains bound by EU rules, ends on December 31. 

If no deal is agreed it would see the UK fall back on to World Trade Organisation terms with the bloc. 

Speaking to broadcasters, the PM said: “From the outset we were totally clear that we wanted nothing more complicated than a Canada-style relationship based on friendship and free trade.

“To judge by the latest EU summit in Brussels, that won’t work for our EU partners.

“They want the continued ability to control our legislative freedom, our fisheries in a way that is completely unacceptable to an independent country.

“And since we have only 10 weeks until the end of the transition period on January 1, I have to make judgment about the likely outcome and get us ready.

“And given that they have refused to negotiate seriously for much of the last few months and given that this summit appears explicitly to rule out a Canada-style deal, I’ve concluded that we should get ready for January 1 with arrangements that are more like Australia’s based on simple principles of global free trade.”

It comes after the UK set a deadline of Thursday to decide whether to continue talks with Brussels. 

Asked if he would be willing to listen to advances from Brussels, Johnson continued: “As far as I can see, they have abandoned the idea of a free trade deal – there doesn’t seem to be any progress coming from Brussels.

“So what we are saying to them is: ‘Come here, come to us if there is some fundamental change of approach’.

“Otherwise we are more than happy to talk about the practicalities that I described – social security issues, road haulage and so on.

“But unless there is a fundamental change in approach, we are going to go for the Australia solution.

“And we should do it with great confidence – as I said, high hearts and confidence because we can do it.

“There was always going to be changes on January 1 but it is becoming clear that the EU don’t want to do the type of Canada deal that we originally asked for.”

European Commission president Ursula von der Leyen said EU negotiators would travel to London next week to “intensify” talks despite the comments.

She tweeted: “EU-UK talks: the EU continues to work for a deal, but not at any price.

“As planned, our negotiation team will go to London next week to intensify these negotiations.

Merkel had attempted to dispel tensions on Thursday night by suggesting that the EU could give some ground and that the UK must “remain open to compromise” earlier this week. 

“In some places things have moved well, in other places there is still a lot of work to be done,” Merkel said. “We have asked the United Kingdom to remain open to compromise, so that an agreement can be reached. This of course means that we, too, will need to make compromises.”

Foreign secretary, Dominic Raab, said on Friday morning that a deal was still possible but that he had also been “disappointed by the lack of flexibility that seems to have come out of the European council”.