EU preparing for Brexit failure, Barnier says

"That's not my preferred option ... But it's a possibility. Everyone has to prepare for it, states as businesses - we are technically preparing ourselves," Barnier said.

The chief negotiator said after the latest round of talks last week that the UK needed to clarify its position on the divorce bill for talks to be able to move on to their next phase on future relations.

EU leaders will gather in December to assess whether Brexit negotiations have made enough progress on the key issues of the divorce money, the border of Northern Ireland, and citizens' rights to start discussions on the future and trade.

British prime minister Theresa May said in September that the UK would honour its financial commitments, but did not spell out in detail what the UK is willing to pay.

"Theresa May has committed to paying the 2019 and 2020 contributions [to the EU budget], as well as other commitments, without specifying which ones. We know what these are, for example, the guarantees given to the European Investment Bank, the European Development Fund, aid to Turkey and Ukraine, but also the pensions of European civil servants, the relocation of the European banks and drug agencies to leave London," Barnier said.

"The European taxpayer should not pay the price of a sovereign decision of the United Kingdom," he said, adding the EU wanted to reach an agreement within 15 working days.

Barnier pointed out that after Brexit the UK will be a third country, and that it is not fully prepared for the consequences of leaving the bloc.

A breakdown in talks could lead to British planes not being able to land in Europe, or cats and dogs not being able to cross the Channel, the negotiator warned.

"Without a deal on future trade, the EU and Britain would revert to World Trade Organisation (WTO) rules and trading relations, like those we have with China," Barnier said.

He added that the way to maintain free trade could be for UK, like Norway, to remain in the customs union and the single market. He said it was a scenario still "possible" for the EU, but that London preferred to leave both.

"We must have a divorce treaty in March 2019, which could include a short period of transition, and the same package should include a political statement that will decide our future relationship - but no more, because we do not have the time," he said.

Barnier's warning comes as pressure mounts on May's government to make progress on Brexit talks.

Her government is reluctant to engage in detailed discussions on the divorce bill before the outlines of the future relations are clear and for fear of backlash from the hardline Brexiteers.

Adding to the pressure was a leaked letter by environment secretary Michael Gove and foreign minister Boris Johnson who have made a veiled attack on chancellor Philip Hammond, for lacking "sufficient energy" in preparing for Brexit.

The private letter - marked only for the attention of the PM and her chief of staff - urged May to imposed a strict deadline on any 'transition' period,  and curb the influence of supporters of a soft Brexit, such as Hammond.