BORIS Johnson will tell EU leaders he would accept border checks in a Canada-style trade deal, a Downing Street source says – despite the Treasury saying that it would cost the UK.

The Prime Minister will give a next-steps speech in London today.

Yesterday, a UK Government source told the PA news agency that Johnson would be prepared to accept a Canada-style free trade deal, a checks-lite agreement allowing tariff-free trade for most goods, but not the UK’s dominant services sector.

However, Treasury analysis from 2018 predicted that scenario would take a 5% gouge out of the UK economy within 15 years, compared to remaining within the EU.

And if that deal can’t be done, Westminster insiders say Johnson’s government would leave under World Trade Organisation (WTO) rules, with some additional measures on international flights.

While this is essentially a No-Deal Brexit, it’s been rebranded as an “Australia-style” deal.

That nation does not currently have a formal free trade agreement with the EU.

A UK Government source said: “There are only two likely outcomes in negotiation – a free trade deal like Canada or a looser arrangement like Australia – and we are happy to pursue both.”

In an article in The Times, French president Emmanuel Macron said the level of single market access granted to the UK would “depend on the degree to which the European Union’s rules are accepted”.

And, according to the Observer, the EU will back Spain over its territorial claims to Gibraltar by giving Madrid the power to exclude its population of 34,000-strong population from any potential trade deal.

Yesterday, Irish Taoiseach Leo Varadkar said that while a Canada-style deal is possible, “Canada isn’t the UK”. He said: “You’re geographically part of the European continent, we share seas and airspace and our economies are very integrated.

“If we are going to have tariff-free, quota-free trade with the UK, which is essentially what we have with Canada on almost everything, then that needs to come with a level playing field. We, for example would have very strong views on fair competition and state aid.”

Appearing on the Andrew Marr Show, he said deal-makers had to ensure not to “repeat some of the errors that were made in the past two-and-a-half years”, adding: “Let’s not set such rigid red lines that it makes it hard to come to an agreement and let’s tone down the kind of nationalistic rhetoric.”

Johnson is understood to be preparing to rule out relaxing rules on workers’ rights, food hygiene standards and environmental protections.

He is also expected, according to Westminster sources, to confirm UK negotiators will pursue free trade agreements with the likes of the United States, Japan, Australia and New Zealand at the same time as dealing with Brussels. The Sunday Telegraph reported that a trade deal is earmarked to be agreed with Japan by Christmas, followed by more agreements with Australia and New Zealand in mid-2021.