RIGA (Reuters) - The short-term market impact will be significant if Britain leaves the European Union without a deal, Foreign Secretary Jeremy Hunt said during a visit to Latvia on Wednesday.

British Foreign Minister Jeremy Hunt and Danish Foreign Minister Anders Samuelsen address the media after their meeting in Copenhagen, Denmark August 15, 2018. Tariq Mikkel Khan/Ritzau Scanpix/via REUTERS

Britain is due to quit the EU in less than eight months, but the government has yet to agree with Brussels the terms of its departure. It has stepped up planning for the possibility of leaving without a formal agreement.

Sterling fell last week, in part on concern about the state of negotiations and the chance of a no-deal Brexit.

Asked about the possible market reaction to leaving without a deal, Hunt said at news conference: “Well, of course, there will be significant short-term impact, but I think in these situations the British economy would find a way to get through it and, indeed, we would find a way ultimately to thrive and be successful.”

Latvian Minister of Foreign Affairs Edgars Rinkevics, who met with Hunt on Wednesday to discuss Brexit, told the same news conference he now estimated the possibility of reaching a deal by the March 29 exit day was 50-50.

Hunt said he did not want to put a percentage on it.

“Of course, there is this risk of a no-deal. But I think there are a growing number of countries that recognise that would be a very, very big mistake not just for the United Kingdom, but for the EU as well,” he said.

“So rather than speculating on exact percentages, let’s work hard to make sure that doesn’t happen.”

During a visit to Helsinki on Tuesday, Hunt said the risk of a no-deal Brexit has been increasing and everyone needed to prepare for the possibility of a “chaotic no-deal Brexit”.

Both London and Brussels say they want to reach agreement at an Oct. 18 EU Council, but diplomats think that target date is too optimistic. EU Brexit negotiator Michel Barnier rejected key elements of British Prime Minister Theresa May’s new trade proposals last month.

Economists say failure to agree the terms of leaving would do serious damage to the world’s fifth-largest economy as trade with the EU, Britain’s largest market, would become subject to tariffs.

Supporters of Brexit say there may be some short-term pain for the economy, but that long-term it will prosper when cut free from the EU. Meanwhile, some lawmakers are pushing for a rerun of the 2016 referendum.