LONDON-British Prime Minister Theresa May accused the European Union on Friday of creating an "impasse" in divorce negotiations by bluntly rejecting her blueprint for Brexit, sending the value of the pound falling as worries about a chaotic U.K. exit from the E.U. soared.
With British newspapers declaring that May had been "humiliated" by E.U. leaders, the prime minister used a televised statement from 10 Downing St. to insist she was prepared to take Britain out of the bloc without a deal if it did not treat the country with more respect.
Declaring that "we are at an impasse," May said the E.U. must lay out "what the real issues are and what their alternative is."
"Throughout this process, I have treated the E.U. with nothing but respect," she said. "The U.K. expects the same. A good relationship at the end of this process depends on it."
The pound fell 1.5 percent to $1.3066 on May's comments, which seemed to make the prospect of an economically disruptive "no deal" Brexit more likely.
May's strong words belied her weak position: She is a prime minister without a parliamentary majority, caught between the E.U. and a pro-Brexit wing of her Conservative Party that threatens to oust her if she makes a compromise too far.
May's combative remarks were calibrated to appease euroskeptic Conservatives ahead of what's likely to be a bruising annual party conference at the end of the month.
May's statement followed a fraught E.U. summit in Salzburg, Austria, which dashed hopes of a breakthrough in stalled divorce talks with only six months to go until Britain leaves the bloc on March 29.
European Council President Donald Tusk said at the meeting that parts of the U.K.'s plan simply "will not work." French President Emmanuel Macron called pro-Brexit U.K. politicians "liars" who had misled the country about the costs of leaving the 28-nation bloc.
The judgment of British newspapers was brutal. The broadly pro-E.U. Guardian said May had been "humiliated." The conservative Times of London said: "Humiliation for May as E.U. rejects Brexit plan."
The Brexit-supporting tabloid Sun branded bloc leaders "E.U. dirty rats," accusing "Euro mobsters" Tusk and Macron of "ambushing" May.
U.K. Brexit Secretary Dominic Raab said the bloc had "yanked up the handbrake" on the negotiations.
May's "Chequers plan" aims to keep the U.K. in the E.U. single market for goods but not services, in order to ensure free trade with the bloc and an open border between the U.K.'s Northern Ireland and E.U. member Ireland.
E.U. officials have been cool on the plan from the start, saying Britain can't "cherry-pick" elements of membership in the bloc without accepting all the costs and responsibilities.
In a statement Friday, Tusk said the bloc's position had "been known to the British side in every detail for many weeks." He said E.U. leaders regarded Chequers as "a step in the right direction" but had been taken aback by May's "uncompromising" stance in Salzburg.
Tusk said in Salzburg that an E.U. summit on Oct. 18-19 would be the moment of truth, when an agreement on divorce terms and the outlines of future trade would be sealed or would fail.
The biggest single obstacle to a deal is the need to maintain an open Irish border. Failing to do so could disrupt the lives of people and business on both sides, and undermine Northern Ireland's hard-won peace.
Britain and the E.U. have agreed on the need for a legally binding backstop to guarantee there is no return to customs posts and other border checks. But Britain rejects the E.U.'s proposed solution, which would keep Northern Ireland inside the bloc's customs union while the rest of the U.K. leaves.
May said Friday the E.U. was "making a fundamental mistake" if it believed she would agree to "any form of customs border between Northern Ireland and the rest of the U.K."
May said she wanted to reassure people in Northern Ireland "that in the event of no deal, we will do everything in our power to prevent a return to a hard border."
She also said more than 3 million E.U. citizens living in the U.K. would retain their rights even if Britain left the bloc without an agreement.
"You are our friends, our neighbors, our colleagues. We want you to stay," May said.
Associated Press writers Danica Kirka and Carlo Piovano contributed.