By Guy Faulconbridge
LONDON, Oct 16 (Reuters) - Prime Minister Boris Johnson will on Friday give Britain's response to the European Union's demand that he either make more concessions to secure a trade deal or brace for a disorderly Brexit at the end of the year.
A tumultuous "no deal" finale to the United Kingdom's five-year Brexit crisis would sow chaos through the delicate supply chains that stretch across Britain, the EU and beyond - just as the economic hit from the novel coronavirus bites.
At what was supposed to be the "Brexit summit" on Thursday, the EU delivered an ultimatum: it said it was concerned by a lack of progress and called on London to yield on key sticking points or embrace a rupture of ties with the blocfrom Jan. 1.
Britain's chief negotiator, David Frost, said he was disappointed and surprised that the EU was no longer committed to working "intensively" for a deal. Johnson, he said, would set out his response.
"Surprised by suggestion that to get an agreement all future moves must come from UK," Frost, who casts Brexit as a revolution that has brought the nation state back into focus, said. "It's an unusual approach to conducting a negotiation."
Britain formally left the EU on Jan. 31, but the two sides are haggling over a deal that would govern trade in everything from car parts and salmon, to Camembert and medicines when informal membership known as the transition period, with Britain still in the EU single market and customs union, ends Dec. 31.
As he grapples with a accelerating second wave of the novel coronavirus outbreak, Johnson will ultimately have to make the final call on whether to accept a narrow trade deal or go for a more tumultuous no-deal that he would seek to blame on the EU.
After Johnson's bid to undercut the 2020 Brexit divorce treaty, there are fears that London is employing what one European diplomat said was Madman Theory - a reference to former U.S. President Richard Nixon's attempt to convince Moscow that he was irrational during the Cold War in the 1970s.
DRAMA OR NO DEAL?
Johnson has repeatedly said that his preference is for a deal but that Britain could make a success of a no-deal scenario, which would throw $900 billion in annual bilateral trade into uncertainty and could snarl the border, turning the southeastern county of Kent into a vast truck park.
The EU's 27 members, whose combined $18.4 trillion economy dwarfs the United Kingdom's $3 trillion economy, say a deal is still possible but that Johnson must give ground.
"We want a deal, but obviously not at any price. It has to be a fair agreement that serves the interests of both sides. This is worth every effort," said German Chancellor Angela Merkel, Europe's most powerful politician.
The major bones of contention remain fishing, level playing field - or fair competition - issues, and governance over compliance with any treaty - three issues that have so far confounded the negotiators.
Goldman Sachs said there could be Brexit drama ahead but that a bare-bones Brexit trade deal was likely to struck by early November.
"We think the perceived probability of 'no deal' will persist through the course of October. But our core view remains that a 'thin', zero-tariff/zero-quota trade agreement will likely be struck by early November," Goldman analyst Sven Jari Stehn said in a note to clients.
(Writing by Guy Faulconbridge, Editing by Paul Sandle and Mark Heinrich)
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