UK, EU to discuss 'structure' of Brexit talks after walkout threat

European and British negotiators will be in touch Monday to discuss the "structure" of post-Brexit trade talks, despite London's threat on Friday to walk away unless there was a major shift in Brussels' approach.

An EU spokesman tweeted that chief negotiator Michel Barnier held video talks with his British counterpart David Frost on Friday after the results of European summit provoked an angry response in London.

Britain Prime Minister Boris Johnson said there was no point in holding any more talks without a dramatic softening of the EU's position, bringing a step closer the possibility that the planned divorce at the end of the year will end acrimoniously.

"As far as we're concerned the trade talks are over," Johnson's official spokesman told reporters after an EU summit Thursday proposed a fresh round of talks next week in London while demanding Britain give ground on key stumbling blocks.

"The EU have effectively ended them, and only if the EU fundamentally changes its position will it be worth talking," he added.

Johnson, accusing the 27-nation bloc of failing "to negotiate seriously" in recent months, said the summit outcome had ruled out a comprehensive, Canada-style free trade agreement between the EU and Britain.

Read: UK ready to walk away without 'fundamental change' from EU

"They want the continued ability to control our legislative freedom, our fisheries, in a way that is obviously unacceptable to an independent country," he said.

"And so with high hearts and complete confidence, we will prepare to embrace the alternative," Johnson said, adding Britain should "get ready" to operate on stripped-down World Trade Organization rules from January.

But EU spokesman Daniel Ferrie later said that both negotiators "agreed to talk again on Monday to discuss the structure" of future talks.

The prime minster's comments weighed on the British pound on currency markets.

To compound matters, Moody's on Friday cut the rating on Britain's debt a notch to Aa3, citing a weakening economy "exacerbated" by Brexit.

"The UK's economic strength has diminished since we downgraded the rating to Aa2 in September 2017," Moody's said in a statement. "Growth has been meaningfully weaker than expected and is likely to remain so in the future... exacerbated by the decision to leave the EU and by the UK's subsequent inability to reach a trade deal with the EU."

After nearly five decades of British integration with Europe a "no deal" outcome will mean tariffs and potential chaos for companies trading across the Channel, especially for goods transportation.

It could also arrive in the middle of a winter surge of the coronavirus pandemic, which has already been worsening since last month across Britain and the rest of Europe.

Johnson had set the EU summit as a deadline for a deal, but he is under pressure after fresh warnings that British companies are far from ready for the consequences of a cliff-edge divorce when a post-Brexit transition period ends on December 31.

The prime minister has repeatedly refused to extend the transition period.

Britain wants to reassert sovereignty over its waters and refuse EU legal oversight over any deal, insisting it wants an overarching trade deal of the kind the EU adopted with Canada in 2017.

Brussels in turn points out that Britain's economy is far more integrated with the EU's than Canada's and that the EU single market must be protected from backsliding on regulation or state aid by Britain.

At their Brussels summit, EU leaders demanded Britain compromise on fair trade rules to unblock the stalled post-Brexit talks.

German Chancellor Angela Merkel said that both sides should cede ground to break the impasse.

Chief negotiator Michel Barnier proposed the meetings in London next week and the EU confirmed he had planned to head to the British capital to intensify negotiations from Monday.

However, UK negotiator David Frost told Barnier there was "no basis for negotiations in London as of Monday" in light of Johnson's declaration, a spokesman at 10 Downing Street said.

The insistence of France and other northern EU fishing nations on maintaining access to British waters has been one major hurdle in the talks so far.

"We are ready to continue to talk, in good faith, to advance, but I will also be very clear: we will not sacrifice any position, any interest and we will not sacrifice our fishermen," French President Emmanuel Macron said.