"A free trade agreement does not require being in the EU." which is only offered to NON European countries. Please see the deal that Switzerland and Norway got. Deals that the UK does not want.

"there way of punishing the UK" Look, If you are going to have a divorce and tell your wife: "Look, we are going to have a divorce but I don't want to pay alimony and we are going to stay fuck buddies and the cottage in Italy that you inherited from your parents, I am still going to use this."

Then all this sounds like an excellent idea but if your wife says "I pass" this does not mean that your wife is going to "punish you". She is just passing on the deal.