U.S. investment bank Citi said the Brexit proposals of British Prime Minister Boris Johnson appeared to fall foul of European Union red lines so an extension and election were likely.

"The UK’s proposals seem to fall foul of established EU red lines," Citi said. "We think the prospects for a deal continue to look weak.

"If a deal is not forthcoming, we expect an extension to be secured and a general election to follow subsequently," Citi said. "Putting forward new plans at such a late stage, and on a ‘take it or leave it’ basis, sets up a clear blame-game in the event of an extension and a general election."