LONDON (Reuters) - Britain will complete its journey out of the European Union at the end of the year without a trade deal unless the bloc substantially shifts position, a UK government source said on Saturday, as time runs out to prevent a turbulent Brexit finale.
With less than two weeks before Britain leaves the EU's orbit, both sides are calling on the other to move to achieve a breakthrough after nine months of talks and safeguard trade in goods from tariffs and quotas.
Since Britain left the EU in January, the talks have been largely hamstrung over two issues - the bloc's fishing rights in British waters and on creating a so-called level playing field providing fair competition rules for both sides.
There is little time left. Both sides need to get any deal approved by their parliaments, and with the talks in their final stages, it is expected that any conclusion will most likely come before Christmas.
"We need to get any deal right and based on terms which respect what the British people voted for. Unfortunately, the EU are still struggling to get the flexibility needed from Member States and are continuing to make demands that are incompatible with our independence," the source said.
"We cannot accept a deal that doesn't leave us in control of our own laws or waters. We're continuing to try every possible path to an agreement, but without a substantial shift from the Commission we will be leaving on WTO (World Trade Organization) terms on December 31."
Prime Minister Boris Johnson, the face of Britain's 2016 campaign to leave the EU, has long said he cannot accept any deal that does not respect the country's sovereignty, a goal that was at the heart of his election last year.
But the EU is equally determined to protect its lucrative single market and wants to prevent London securing what it considers to be the best of both worlds - preferential market access with the advantage of setting its rules.
Many businesses fear a failure to agree a deal on goods trade would send shockwaves through financial markets, hurt European economies, snarl borders and disrupt supply chains.
While there has been some progress in the talks, the British side has taken a more pessimistic view, regularly saying that a no deal outcome was the most likely.
EU diplomats have dismissed this as "theatre" or a negotiating tactic, repeating that there is a path to deal, albeit it a narrow one.