The current UK Brexit proposal is impossible because it could hamper the single market, European Council president Donald Tusk has warned.
Both the UK and EU stressed that negotiations would continue, and that they remained hopeful of a ‘good’ deal. However, both also acknowledged that they were undertaking preparations in case no deal were agreed upon, and Britain was forced to leave the bloc without a formal arrangement.
“Everybody shared the view that while there are positive elements in the Chequers proposal, the suggested framework for economic cooperation will not work, not least because it risks undermining the single market,” said Mr Tusk.
Yet, British Prime Minister Theresa May hit back and said her proposal was the “only serious and credible” idea on the table. The so-called Chequers agreement calls for the UK to remain in the EU’s single market for goods, but not for services and ensures there is no return to a hard frontier between Ireland and Northern Ireland.
“The moment of truth for Brexit negotiations will be the October European Council. In October we expect maximum progress and results in the Brexit talks,” added Mr Tusk.
They were talking after an informal EU summit in Salzburg where leaders discussed Brexit and the UK’s Chequers plan for leaving the Union.
Mrs May told reporters "there are key issues we need to resolve", but remained optimistic, adding "I believe that there is a willingness to do a deal." Mrs May said the discussions were “frank” but insisted it was in the “EU’s interest as well as the UK’s” to reach a good deal. “Yes, concerns have been raised and I want to know what those concerns are,” she added.
"There is still a lot of work to do regarding the question of future trade relations," German chancellor Angela Merkel said at a briefing after the summit. "We have all agreed today that there can be no compromises with regard to the single market."
Mrs May said she would put forward her own proposals on how to avoid a hard border in with Ireland soon. Though, she declined to give any details on what it they might include include, except to say that it wouldn’t carve the UK into two customs areas.
“All of the EU leaders ... gave me their absolute support in standing behind Ireland, saying that an agreement that doesn't work for Ireland, doesn't work for the EU," Ireland's Prime Minister Leo Varadkar told reporters.
"There will be no withdrawal agreement without an Irish protocol."
The backstop would keep Northern Ireland under EU economic oversight if London and Brussels were unable to agree a trade pact to keep UK-EU borders open after a transition period set to end in 2020 - an idea that Mrs May and Northern Ireland's Democratic Unionist Party, which props up her government, both oppose.