Johnson refrained from saying that he wouldn’t continue to negotiate. He pledged to work with the EU if they took a “fundamental change of direction” in their approach. However, Johnson criticized the EU for not offering the UK the same kind of trade terms as Canada, lamenting that 45 years of partnership apparently counts for nothing.

Johnson sounded cheery enough, proclaiming that his government would proceed “with high hearts and complete confidence”:

The UK has to “get ready” for no trade deal with the EU, Prime Minister Boris Johnson has said.

Unless there was a “fundamental” change of direction from the EU, he said the two sides would not be able to agree a post-Brexit economic partnership,

The UK set a deadline of Thursday to decide whether it was worth continuing talks amid continuing disagreements.

Both sides have indicated they want to carry on but the EU has said it is up to the UK to make the next move.

What exactly does a no-deal Brexit mean? Economically, it could be a disaster, CNN reported this morning, costing the UK more than $25 billion in badly-needed growth this year and next:

Walking away empty-handed — which Johnson threatened to do on Friday — would create disruptions to trade when the transition period ends later this year, shaving more than $25 billion off the UK economy in 2021 compared to a scenario where a limited free trade deal is agreed, according to a CNN Business analysis based on forecasts from Citi and the Institute for Fiscal Studies. That would put the country even further behind on its efforts to recover from the historic shock triggered by the pandemic. …

Citi and IFS estimate that the UK economy will contract by 9.4% this year. That would be the largest drop since 1921, according to data from the Bank of England. The additional restrictions coming into effect could make matters worse.

A disorderly break with the European Union on top of the coronavirus recession would only prolong the recovery.

With a limited trade agreement, the UK economy is due to bounce back with growth of 4.6% in 2021 before losing some momentum between 2022 and 2024, according to IFS and Citi projections. Failing to reach a trade deal with Europe would shave as much as one percentage point off that level of growth. The difference comes out to nearly £20 billion, or over $25 billion.

According to economists at Citi and IFS, even the best-case scenario of a limited trade agreement would leave the UK economy 2.1% smaller in 2021 than it would have been if the transition period was extended indefinitely.

Needless to say, that would ripple across the Atlantic and Europe too, although it’s tough to predict exactly how. This also calls into question the issue of the Irish border and its impact on the Good Friday Agreement all over again. Mostly, though, it calls into question just how much juice Johnson still has as his country enters into a second spike of COVID-19 and new restrictions on commerce. It’s one thing to declare the joy of disconnection when you’re economy is growing and no other crises are at hand. It’s quite another to sustain this kind of damage in the midst of an economic crisis and pandemic, politically speaking.

But just how serious is Johnson’s declaration that the UK will adopt an Australian-style trade relationship with the EU — in other words, no formal relationship at all? The EU says they’re all still negotiating, and that no one has pushed back from the table yet:

“The EU continues to work for a deal, but not at any price,” said European Commission President Ursula von der Leyen around an hour after Johnson’s comments, which sent sterling lower.

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

An EU official added: “It’s very good that he (Johnson) wants to keep on negotiating.”

The Irish Times suspects this is an Art of the Deal maneuver to shake up the talks on fisheries and aid:

In a bleak assessment of the state of negotiations, Mr Johnson said: “They want the continued ability to control our legislative freedoms and fisheries in a way that is completely unacceptable for an independent country.” …

“For whatever reason after 45 years of membership they are not willing – unless there is a fundamental change of approach – to offer us the same terms as Canada,” he said.

“With high hearts and complete confidence we will prepare to embrace the alternative and we will prosper mightily,” Mr Johnson added. Britain would try to negotiate side deals to minimise disruption, he said.

Tory MPs have speculated for some time that Mr Johnson would need a “crisis” to bring negotiations with the EU to a head and that moment appears to have arrived.

In a way, it might also be Johnson’s way of preparing the political battleground for some concessions to his own position. Fears of a no-deal might soften up some Brexit hardliners in his own party, allowing Johnson a little more flexibility at the bargaining table. Most likely, though, Johnson’s making this declaration in much the same way Trump did with Phase 4 relief negotiations with Nancy Pelosi — to reset the narratives and to force the other side to blink.

Will it work? At least Johnson and other EU leaders are still on speaking terms, unlike Trump and Pelosi, who haven’t spoken in a year. As long as they’re talking, a deal is still possible.