The prime minister has told UK businesses to prepare for a “no deal” exit from the EU, after EU leaders this week rejected British demands they compromise in order to secure a free trade agreement.

In recorded comments broadcast on the BBC and Sky News, Boris Johnson (pictured) said that the EU’s decision this week effectively meant it had ruled out a “Canada-style” free trade deal, and he had therefore concluded that the UK should get ready for an “Australia-style” outcome.

Australia has no trade deal with the EU, and trades with the bloc on World Trade Organisation terms.

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