EU set to offer Britain a stripped-back Canada-style trade deal as officials accuse UK of being in ‘Brexit la-la land’
EU officials are reportedly worried there are no concrete trade proposals from Britain
THE EU is set to offer Britain an off-the-peg trade deal if the UK can't unite behind a Brexit vision, it emerged today.
Brussels officials have reportedly accused Britain of being in "Brexit la-la land" and are concerned that ministers are warring over European trade.
They will tell the UK to sign up to a Canada-style deal which would allow free trade in goods but not in services, .
The plan is a fallback if Theresa May doesn't put forward a concrete proposal for a bespoke deal.
David Davis has previously insisted Britain will get a "Canada plus plus plus" agreement allowing free trade in every sector.
But EU negotiators say they are fed up with infighting in the Cabinet about how far Britain will diverge from European rules under a future trade agreement.
If they don't agree a bespoke deal within the next few months, Brussels will instead propose an agreement based on Ceta, the EU-Canada deal.
One European diplomat told the FT Britain is "in Brexit la-la land" and predicted Mrs May would see her illusions shattered.
The diplomat added: "There will come a time, I don’t know when. We will say, here is what we prepared earlier. Now read and sign on the dotted line."
The British side is adamant a Canada-style deal would not be good enough because it doesn't cover the crucial services sector.
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Mr Davis also wants to add security, foreign policy and fisheries to the Brexit trade agreement.
The Cabinet this week started formal discussions about what they want the deal to look like.
And Mrs May is expected to make a major speech in the New Year setting out her vision for post-Brexit trade.
What is a Canada-style trade deal?
Ceta, the trade deal between the EU and Canada, came into force this year after seven years of negotiations.
Under the terms of the deal, there are no customs duties on 99 per cent of goods traded between Europe and Canada.
All tariffs on industrial products are scrapped, and most tariffs on agricultural exports.
And companies from the EU are able to make bids for government contracts in Canada, and vice versa.
A deal along the same lines would be welcomed by many Brexiteers because it imposes few restrictions on Canada.
The country does not pay into the Brussels budget or accept free movement of EU migrants.
It is outside the jurisdiction of the European Court of Justice - instead, there is a separate court which rules on any disputes.
But the deal does not involve trade in services - by far Britain's biggest industry - meaning ministers are keen to get a more comprehensive agreement.