There is a growing danger travel businesses will face the twin challenges of Covid-19 and Brexit at the turn of the year in a situation of “high unemployment and low cash reserves”.

Mark Tanzer, chief executive of UK travel association Abta, warned of the difficulties a no-deal Brexit would pose amid the coronavirus pandemic and said: “I am concerned time is running out.”

Speaking on a Travel Weekly Roadmap to Recovery webcast, Tanzer said: “If the UK government maintains its current position, we may well end up where we leave without a deal.”

Existing UK-EU arrangements are due to end on January 1 after Britain left the EU at the end of January this year and entered an 11-month transition period.

The UK government has so far insisted it will not change the deadline for ending the transition despite making little progress on agreeing new arrangements with Brussels.

EU chief negotiator Michel Barnier warned this week that “significant divergences” remain.

Tanzer said: “Whatever one thinks politically, a no-deal exit will be disruptive in the short term particularly with coronavirus being an issue. It doesn’t help to have them coming together.

Businesses are going to face these twin challenges. They are going to need to adapt to whatever the new arrangements are after Brexit and that will cost money.”

He said: “There will be new systems needed, new arrangements, new ways of working and companies will already be weakened because they’ve had a year of coronavirus. It will make the Brexit adjustment more difficult.”

Tanzer warned: “Brexit will be challenging even with a strong economy. If we’re in a situation where we have high unemployment and low cash reserves to invest in the transition, it could be more difficult.”

However, he said: “Unless we see significant progress in the near future, we will have to start planning again for a no-deal exit.

“The rules of engagement [between the UK and EU] are ‘Nothing is decided until everything is decided’.

“It means that, even if there is a strong agreement in principle in an area like tourism, we won’t have confirmation until all the other issues have been resolved – and lots of those issues are a long way from agreement.”

Tanzer acknowledged: “The coronavirus has impeded the discussions and the government’s attention may rightly have been on other things. But we still have that hard deadline of December 31.

“We had to do a lot of preparation for a no-deal exit last year and a lot of guidance for members, and we will be dusting that off and updating it.”

The Abta chief noted the UK travel industry wants “pretty much unfettered access [to the EU] through transport links, the ability to move essential workers around and reciprocal health care and other consumer rights”.