U.K. markets appeared to take little notice of Prime Minister Boris Johnson's warning that the country is headed for no deal in its Brexit negotiations with the European Union.
The U.K. left the EU on Jan. 31, entering a transition period for Brexit negotiations with the EU until Dec. 31.
However, Mr. Johnson warned Friday that the latest EU summit in Brussels indicated that the U.K.'s request for "nothing more complicated than a Canada-style relationship, based on friendship and free trade," is unlikely.
The Canada-EU deal, the Comprehensive Economic and Trade Agreement, cut tariffs and makes it easier to export goods and services, according to the European Commission's website.
The EU wants "the continued ability to control our legislative freedom, our fisheries, in a way that is obviously unacceptable to an independent country," Mr. Johnson said in a statement.
Instead, the U.K. should prepare for a deal like the EU has with Australia, "based on simple principles of global free trade. And we can do it, because we always knew that there would be change on Jan. 1 whatever type of relationship we had," he said.
The EU "launched negotiations for a comprehensive and ambitious trade agreement with Australia" in 2018, with aims including the removal of barriers and helping EU firms to export more to the country, the commission website said.
The FTSE 100 was up 1.49% at the close of markets in the U.K. The FTSE All-Share was up 1.18% while the FTSE 250 was down 0.09%. The pound sterling gained 0.11% vs. the U.S. dollar.
"It's hard to be forgiven for a sense of deja vu, but this is likely just another theatrical element in the Brexit saga," Elliot Hentov, head of policy research at State Street Global Advisors, said in a statement. "The reality is that the biggest issue has already been resolved, namely that of state aid. It beggars belief that the U.K.-EU relationship would be hostage to the fishing industry (contributing 0.1% of GDP), regardless of its political relevance. Markets thus far also seem to doubt the headline with sterling and gilts largely unmoved."
Mr. Johnson said progress has been made in areas including social security, aviation and nuclear cooperation, "but for whatever reason it is clear from the summit that after 45 years of membership they are not willing — unless there is some fundamental change of approach — to offer this country the same terms as Canada. And so with high hearts and complete confidence we will prepare to embrace the alternative."
On her official Twitter account, Ursula von der Leyen, president of the European Commission, said: "The EU continues to work for a deal, but not at any price. As planned, our negotiation team will go to London next week to intensify these negotiations."
