Britain clinches first major trade deal since leaving the EU

Britain has reached a free trade agreement with Japan, its first since leaving the European Union earlier this year.

The deal was agreed to in principle on Friday.

The UK Department for International Trade said in a statement that it will increase trade between the two countries by about £15.2 billion ($19.5 billion).

As a result, UK businesses won't face tariffs on 99% of exports to Japan, including on products such as knitwear, biscuits and coats.

Also, Japanese car manufacturers including Nissan (NSANF) will enjoy reduced tariffs on parts coming into the UK and streamlined regulatory procedures, according to the statement.

The UK government plans to replicate dozens of EU trade deals with third countries before its transitional agreement with the bloc expires at the end of the year. If the deals don't materialise, British companies could face barriers to doing business in most of the foreign markets they serve starting next year.

Meanwhile, the European Union stepped up planning for a 'no-deal' Brexit on Friday after Prime Minister Boris Johnson's government refused to revoke an ultimatum on breaking the divorce treaty that Brussels says will sink four years of talks.

Britain said explicitly this week that it plans to break international law by breaching parts of the Withdrawal Agreement treaty that it signed in January, when it formally left the bloc.

Britain says the move is aimed at clarifying ambiguities, but it caused a new crisis in talks less than four months before the United Kingdom is due to complete its departure from the EU's orbit when a transition period ends in December.

The EU has demanded that Britain scrap the plan to breach the divorce treaty by the end of this month. Britain has refused, saying its parliament is sovereign above international law.

EU chief negotiator Michel Barnier said on Thursday, after talks in London, that the bloc was increasing its planning for a no-deal Brexit at the end of this year after trade talks made little progress.

Investment banks have increased their estimates of the chances of a messy end to Britain's divorce from the trading and political bloc it first joined in 1973, and sterling has fallen against the dollar and the euro.

European Commission Vice President Maros Sefcovic urged Britain to scrap by the end of September the main elements of new legislation put forward this week that would override parts of the Withdrawal Agreement, but Britain said parliament would debate the bill on Monday.

The bill will face opposition in both houses of parliament as many senior British politicians have expressed shock that London is explicitly planning to breach international law.

Barnier's team will brief the 27 members of the EU on the progress of trade talks on Friday.