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David McAllister, chairman of the UK Coordination Group of the European Parliament, has warned a no deal scenario will have “serious consequences” for the EU and will force the bloc to implement emergency plans. Mr McAllister, who is also a member of Angela Merkel’s Christian Democratic Union party, acknowledged the impact would be felt on trade and result in tariffs being placed on EU exports such as the automotive industry.

He said: “A no deal would have serious consequences.

“First of all, we would have to try to cushion the worst of the disruptions as part of the emergency measures in December, this applies in particular to flight connections, air traffic safety, road freight traffic and passenger bus traffic.

“The most serious change that would come with a no deal is that we then trade with one another on the basis of WTO rules. And that means in some cases considerable tariffs on cars, trucks, etc.”

David Frost, the UK chief Brexit negotiator and his EU counterpart Michel Barnier will continue to final phases of discussions in London this week, with outstanding issues remaining over fisheries, state aid and the so-called level playing field on competition.

Both sides have already completed more than 600-pages of legal text ahead of the official December 31 deadline and Mr McAllister said he remains “cautiously optimistic”.

He added: “The negotiations are now entering the very final phase, and in the next few days we will have clarity as to whether there will be an agreement or not.

“Many draft texts have now been completed, but considerable differences remain, particularly on three controversial issues. I remain cautiously optimistic.”

Downing Street has reiterated the desire for the UK to reach a deal but warned it would not come at a price.

A spokesman for the Prime Minister said: “We want to try and reach a free trade agreement as soon as possible but we’ve been clear we won’t change our negotiating position.”

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