(Bloomberg) --

European Union Trade Commissioner Phil Hogan warned that the bloc’s ties with the U.K. will undergo a “massive” change when the post-Brexit transition period ends -- regardless of whether both sides reach a trade deal by their year-end deadline.

Speaking to a European Parliament committee in Brussels on Wednesday, Hogan urged EU governments to do more to make businesses aware of the changes they face after Dec. 31. Because London plans to leave the single market and customs union, any free-trade agreement would only limit the economic damage, he said.

“On Jan. 1, things will change anyway -- even if we reach a deal,” Hogan said. “It will be much worse without a deal, but even with a deal there is going to be a massive change in terms of logistics, in terms of how we trade with each other, how we travel.”

Businesses face the prospect of additional customs declarations and delays at the border even if the two sides reach an agreement on their future relationship. If those talks fail, the U.K. would default to trading with the EU on World Trade Organization terms -- meaning tariffs and quotas would also return for the first time in a generation.

Earlier this month, British cabinet minister Michael Gove warned logistics firms to brace for strict border controls, while business lobbyists are saying that the cost of customs paperwork will hit shoppers.

Negotiations between the U.K. and EU about their future relationship have already become fraught even before formal talks are slated to begin next month. Britain is seeking a tariff and quota-free agreement on goods trade similar the one Canada signed with the EU. But it has rejected the bloc’s insistence that the U.K. should still follow European rules in areas such as state aid and the environment after leaving the bloc.

“We are clear we are not asking for a special, bespoke or unique deal; we want a Canada-style free trade agreement, which the EU has frequently said is on offer,” a U.K. government spokesman said. “There is no reason that our proximity to the EU should mean extra restrictions on trade.”

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--With assistance from Ian Wishart.

To contact the reporter on this story: Jonathan Stearns in Brussels at jstearns2@bloomberg.net

To contact the editors responsible for this story: Ben Sills at bsills@bloomberg.net, Edward Evans, Zoe Schneeweiss

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