Boris Johnson has said that, unless there is a "fundamental change of approach" from the EU, Britain is prepared to move to trading on World Trade Organisation rules when the Brexit transition period ends.
The Prime Minister said this week's EU summit in Brussels has made clear that the EU is not prepared to offer the kind of Canada-style deal the UK is seeking.
"They want the continued ability to control our destiny and freedom, our fisheries, in a way that is completely unacceptable," he said.
"Given that this summit appears to explicitly rule out a Canada-style deal, I think that we should ready for January 1 with arrangements that are more like Australia's."
Mr Johnson had previously made clear that if there was no agreement by the time of the two-day summit, which began on Thursday, he would walk away from the negotiating table.