Britain has begun a fresh round of Brexit trade talks by warning the European Union it is ramping up preparations to leave the bloc without an agreement as the two sides bicker over rules that govern nearly $US1 trillion ($A1.37 trillion) in trade.

Britain left the EU on January 31 but talks on new trade terms have so far made little headway as the clock ticks down to an October deadline for a new deal and the end of the status-quo transition arrangement in late December.

As diplomats try to gauge whether Prime Minister Boris Johnson is blustering or serious about allowing a tumultuous finale to the 4-year Brexit saga, his chief negotiator said yet again said Britain was not afraid of a no-deal exit.

“We have now been talking for six months and can no longer afford to go over well-trodden ground. We need to see more realism from the EU about our status as an independent country,” David Frost, Britain’s top Brexit negotiator, said.

“If they can’t do that in the very limited time we have left then we will be trading on terms like those the EU has with Australia, and we are ramping up our preparations for the end of the year.”

The EU warned Britain on Monday that its international reputation as a pillar of the West would be tarnished and that there would be no trade deal after the Financial Times reported that London might simply undercut the Withdrawal Agreement treaty signed in January.

European diplomats said Britain was playing a game of Brexit chicken by threatening to collapse the process and challenging Brussels to compromise first, but some fear Johnson may view a no-deal exit as useful distraction from the coronavirus crisis.

The latest round of negotiations in London are likely to be tough: Britain says the EU has failed to understand that it is now an independent country – especially when it comes to fishing and state aid.

The EU, weary after the worry and wrangling over Brexit, says it needs specifics from London and that Britain cannot make its own rules and have preferential access to its markets.

As Johnson says mid-October is the deadline for a deal, diplomats said the public rhetoric and posturing was to be expected.

“As you get closer to the deadline, it’s not surprising people ramp up the pressure,” one EU diplomat said. “We all believe there has been movement by the EU towards the UK position, but it hasn’t been reciprocated, and that’s the concern.

“So, time is running out. If we are to get the deal that everybody wants, given the number of open issues and given the amount of time left, any deal is looking thinner and thinner.”

Without an agreement, trade and financial ties between the world’s sixth-largest economy and its biggest trading bloc would be thrown into disarray, likely spreading havoc among markets and businesses.