EU and UK negotiators will resume talks in Brussels this week with time running out to prevent a “catastrophic” No-Deal Brexit.

Boris Johnson has previously said he wants agreement on a free trade deal by the time of this week’s critical EU summit on Thursday.

He had indicated he will walk away from the negotiating table if there is no solution at that point – claiming that otherwise it would be too late to implement it before the Brexit transition period runs out at the end of this year.

However, yesterday it was reported lead negotiators Michel Barnier and David Frost have agreed to keep talking even if a wider deal is not reached by Thursday, with the end of October now seen as a real deadline.

One possibility is the EU and UK would then aim during November to put together “mini-deals” to try to prevent major disruption in areas such as aviation and roads after December 31.

A senior EU diplomat was also quoted as saying member states were “becoming a bit nervous”, and commission officials were stepping up contingency plans.

Last Friday the EU’s negotiator Barnier and the UK’s negotiator Frost met for face-to-face discussions in London.

Following the meeting Downing Street said there were still differences over some “important issues”.

The talks are expected to continue until Thursday afternoon, but EU sources have said concessions from Britain are needed before the “tunnel” of 24-hour talks to set out a final legal text can be entered.

The key sticking points have been on state aid and fisheries, and if no agreement is reached, the UK and EU would do business under World Trade Organisation (WTO) rules.

Dr Simon Sweeney, senior lecturer in international political economy and business at the University of York, said there was an urgency on both sides to find a deal.

“It is quite clear that No Deal would be a dramatic outcome which would negatively impact on both sides,” he said.

“It is my view it would be far more negative for the UK than for the EU, but it would definitely be a serious outcome for many players in this question, as well as citizens of Europe and the UK.

“What is very curious is that our Prime Minister has said that a No Deal would be a good outcome for the UK. This is a palpable nonsense.

“A No Deal would be a seriously bad outcome for a multitude of reasons that cover UK trade in goods and services, issues like security, like freedom of movement for UK citizens, insurance costs, food supplies, medicines supplies, queues at borders.

“And the direct impact on UK industries that export would be catastrophic.”

Last month Johnson claimed the UK would have an “Australian-style deal” if the deadline this week passes without agreement.

In a statement, he said: “The EU have been very clear about the timetable. I am too. There needs to be an agreement with our European friends by the time of the European Council on October 15 if it’s going to be in force by the end of the year.

“So there is no sense in thinking about timelines that go beyond that point. If we can’t agree by then, then I do not see that there will be a free trade agreement between us, and we should both accept that and move on. We will then have a trading arrangement with the EU like Australia’s.”

But Sweeney said this would be a “terrible outcome” and was a misnomer for trading on WTO rules, which would mean the introduction of barriers at ports, customs checks and tariffs on manufactured goods and agricultural products.

“So this cannot be allowed to happen,” he said. “My perception is there will be a deal, but it will be a very thin arrangement which allows for import and export of goods, foods, medicines etc between the EU and Britain.

“However, it will still require customs, it will still require checks, it will still require paperwork.

“I think there will be a thin deal covering no tariffs and no quotas, but it leaves so much else to be determined.”

HE added: “This Conservative cry in 2019 of ‘Get Brexit Done’ is utter nonsense, as getting Brexit done is going to take many, many years.

“We will be going after January 1, 2021 into a long period of argument, dispute resolution, an extraordinarily complex arrangement that will be a rolling feast of continual argument. It is not a happy outcome.”

One of the issues which has stalled agreement so far is that the EU wants the UK to closely follow its rules on state aid, the financial assistance given by government to businesses.

The UK has previously insisted it must have full sovereignty over its state aid regime, but last Wednesday chief UK negotiator Frost said the two sides were “beginning a discussion” on agreeing some provision.

The second contentious issue –which many expect to dominate the final talks – has been over fisheries.

The UK wants continued full access to EU markets to sell fish, but does not want to provide the EU’s fishing fleets to have full access to UK waters.

However the EU does not want any change to the status quo, with Belgium, Denmark, France, Germany, Ireland, the Netherlands, Spain and Sweden having a particular interest in maintaining current catch quotas.

The reaction of France to any potential concessions could prove crucial, with its fleets catching 84% of Channel cod.

Whatever the outcome of the talks, it has yet to be seen what the long-term fallout from the chaos of the Brexit process will be for the UK’s reputation on the international stage.

Not least over the controversial UK Internal Market Bill, which gives the UK Government the power to go back on the Northern Ireland Protocol within the Withdrawal Agreement – designed to avoid a hard border on the island of Ireland – and breaches international law.

It has led to the European Commission starting legal proceedings against the British Government.

Last week the President of the European Council, Charles Michel, said the EU wanted a deal, but warned it would not be at any cost.

He called for the UK to “restore trust and to put all its cards on the table” and for the full implementation of the Withdrawal Agreement.

“This text has been negotiated for three years, each word, each comma has been debated for hours and hours,” he said.

“It has been modified by both parties. There is simply no question of its full implementation.”

Sweeney said the UK had lost reputation over Brexit and it has caused “widespread” damage.

“The damage is how the British Government is perceived in the rest of Europe,” he said. “On the diplomatic front I think there is disappointment with how the UK has conducted itself.

“The Internal Market Bill is a massive demolition ball into a significant component of the Withdrawal Agreement signed by the Prime Minister less than a year ago.”

He said negotiations with the EU would continue to the wire, but added that “deadlines have a habit of moving”.

“In the end my estimate is there will be a bare-bones agreement, the Prime Minister will come back waving a piece of paper saying what a marvellous achievement it is that we stood by and defended British interests and we have achieved a great outcome for this great country,” he said.

“That is the kind of language we can be prepared for, as it is the kind of language that is habitual for this Prime Minister. The real truth is that Britain, the UK, is much damaged and even the integrity of the UK is threatened by what is happening.”

On Friday, a Number 10 spokesman confirmed that informal discussions would resume in Brussels this week .

“Progress has been made in some areas, however there still remains differences on some important issues but we remain committed to trying to agree a FTA (free trade agreement),” the spokesman said. “We continue to want an agreement, we continue to want an FTA but it is important that we can agree on some issues.”

Meanwhile, businesses across the UK are being warned they have to take action now to prepare for the end of the Brexit transition period.

With just 81 days to go, UK Business Secretary Alok Sharma will write to more than 600,000 firms across the UK tomorrow calling on them to familiarise themselves with the steps they will need to take.

This will include changes to the way businesses import and export goods, the process for hiring people from the EU and the way businesses provide services in EU markets.

Sharma said: “There will be no extension to the transition period, so there is no time to waste.”