Prime Minister Theresa May has said that “no deal is better than a bad deal” but that the “best outcome” was to leave with a deal.
Mrs May speaking inside Downing Street said: “I have always said that no deal is better than a bad deal.
“But I have also been clear that the best outcome is for the UK to leave the EU with a deal.
“That is why following months of intensive work and detailed discussions, we proposed a third option for our future economic relationship based on the frictionless trade of goods.
“That is the best way to protect jobs here and in the EU and to avoid a hard border between Ireland and Northern Ireland, while respecting the referendum result and the integrity of the United Kingdom.”
‘Making a mockery’
She said: "I have always said that these negotiations would be tough, and they were always bound to be toughest in the final straight.
"While both sides want a deal, we have to face up to the fact that despite the progress we have made there are two big issues where we remain a long way apart."
Mrs May added that the EU had only given the UK two options, which included an option to stay within the European Economic Area.
The Prime Minister described this option as “making a mockery” of the EU referendum in June 2016.
She said: "Throughout this process, I have treated the EU with nothing but respect. The UK expects the same. A good relationship at the end of this process depends on it.
"At this late stage in the negotiations, it is not acceptable to simply reject the other side's proposals without a detailed explanation and counter proposals."
‘I will not overturn the result of the referendum’
European Council President Donald Tusk at Thursday's EU summit in Salzburg, Austria
The Prime Minister concluded her statement by saying: "The EU should be clear, I will not overturn the result of the referendum, nor will I break up my country.
“We need serious engagement in resolving the two big issues in the negotiations and we stand ready."
The pound plummeted following Mrs May's speech, trading down 1.3% versus the US dollar at 1.31.
Against the euro, sterling was down 1% at 1.11.
This comes as the European Council President Donald Tusk said on Thursday that Mrs May’s Chequers plan “will not work”.
During a speech in Salzburg, where May met with EU leaders over dinner last night, he said that no Brexit agreement can be reached without a solution to the Irish border issues, and “while there are positive elements in the Chequers proposal, its suggested framework for economic cooperation will not work, not least because it risks undermining the single market”.
TalkRADIO’s Political Editor Ross Kempsell told Matthew Wright: “This statement is very much designed to preserve the Chequers position as Theresa May has put it out.”
He added: “The position that European President Donald Tusk said yesterday ‘does not work’ and absolutely savaged and ripped up that plan in an unexpectedly brutal set of comments which were made at press conference at which Theresa May was seen to be under huge pressure.
“She was physically shaking from the pressure in that press conference yesterday which I do really think has hit Number 10 like a train.
“I think this is why they have done this statement today.”