The Government will reintroduce elements of the Internal Market Bill in the Commons next week in a move which will send shockwaves across Europe. The Prime Minister has stood firm on the legalisation which paves the way for internal trade to continue from Northern Ireland to the rest of the UK if there is no formal trading relationship struck with the EU.
Ministers support the changes despite acknowledging the plans could breach parts of the Northern Ireland Protocol – aimed at preventing a hard border down the Irish Sea.
A Finance Bill will also be tabled to authorise the creation, extension or increase of taxes or other charges.
Brexit trade talks remain at a standstill and Mr Barnier had told officials in Brussels he is closely monitoring the developments in the Commons.
EU leaders have already condemned the UK for attempting to go back on the deal signed in January.
According to officials present in the meeting of EU ambassadors on Wednesday, the legislation would not be an immediate deal-breaker for the bloc over fears the EU would be blamed.
One EU diplomate said: “It’s the EU’s strategy to never walk away, as that would make it too easy for London to blame us.”
Meanwhile, Ireland’s foreign minister Simon Coveney warned the UK against pressing ahead with the bill.
He insisted the move would indicate the UK does not want a trading relationship with Europe.
“A real bill in terms of the EU taxation provisions once we have ended the transition period.
“We will be doing the Lords amendments on Monday and we will be pushing back all the amendments which were made in the Lords – including the ones relating to clause five and ensuring that we can put the best interests of the whole United Kingdom first.
“These are really important pieces of legislation.”