Mr Martin said there was still the “potential for a deal”, but warned that the Government’s controversial legislation which enables the UK to break international law had “eroded trust”.
He told the i newspaper in an interview to be broadcast at the Liberal Democrat conference on Monday that the UK Internal Market Bill “damaged the credibility” of agreements already entered into.
Asked if he believes a free trade agreement is likely, he said: “I’m not that optimistic, if I’m honest. Just to let you know that the (Irish) government is preparing its budget in three weeks’ time on the basis that there will be a no-deal Brexit.
“That’s the basis on which we’re preparing the budget and we’re warning and alerting businesses to that terrible reality.
“I think progress has been slow in the talks so far, I think there is still potential for a deal, I believe a deal is the sane and sensible thing to do, and I think all of us as politicians have an obligation to those we represent – and in terms of Brexit that means the least damage possible to workers, to employers and to business and economy.”
The ninth round of trade deal negotiations between the UK and EU will begin on Tuesday in Brussels, but the time left to reach a deal is dwindling.
There are fewer than 100 days until the transition period, in which the UK remains in the single market and continues to follow EU law, ends on December 31.
