* Carney warns of housing market crash
* Labour to vote against a deal if May gets one
* Co-op cautions of risk of food shortages (Adds FT report of Carney deal boost)
By Kylie MacLellan
LONDON, Sept 14 (Reuters) - Britain and the European Union are "closing in" on a withdrawal agreement, Brexit minister Dominic Raab said on Friday, before a meeting of European leaders in Salzburg next week.
Britain is due to leave the bloc on March 29 but has yet to reach a full exit deal with Brussels, and some rebels lawmakers in Prime Minister Theresa May's Conservative Party have threatened to vote against any agreement unless she changes her proposals.
Both London and Brussels are hoping to reach a deal by mid-November. May has said next week's informal EU summit will be a "staging post" in the negotiations that will allow the bloc's leaders to discuss her Brexit plans for the first time.
"While there remain some substantive differences we need to resolve, it is clear our teams are closing in on workable solutions to the outstanding issues in the Withdrawal Agreement, and are having productive discussions in the right spirit on the future relationship," Raab said after a phone call with EU chief negotiator Michel Barnier.
"We reiterated our willingness to devote the necessary time and energy to bring these negotiations to a successful conclusion," he said, adding that the pair agreed to take stock again following the Salzburg summit.
Barnier said on Twitter that he had had a "useful dialogue" with Raab but that key differences remained between the EU and Britain over the future of the Irish border and the EU's system of protecting food names.
EU officials and diplomats involved in the talks also expressed surprise about the apparent optimism in financial markets on the likelihood of a deal.
On Thursday the British government published a set of advice notices for Britons on how to prepare for the possibility of a "no-deal" Brexit, and May held a cabinet meeting of her top team of ministers to discuss the government's plans for leaving without an agreement.
Bank of England Governor Mark Carney told the meeting Britain's property market would crash and mortgage rates would spiral up in the event of a chaotic no-deal Brexit, with house prices falling 35 percent over three years, the Times newspaper reported.
The Co-Operative, Britain's sixth-largest supermarket group, said it could not guarantee shortages of some food products would be avoided in the event of a no-deal Brexit.
However, Carney also told the cabinet meeting that Britain could expect a 16 billion pound boost if there was a deal struck based on May's so-called Chequers proposals which involve a common rule book for goods trade with the bloc, the Financial Times reported.
"Carney said that we would recover three-quarters of the growth lost after the 2016 referendum because Chequers would imply more access to the European market than under current assumptions," an unnamed cabinet source told the FT.
Pro-Brexit rebels in May's party have become increasingly vocal in their opposition to her Brexit proposals this week, with one former junior minister saying 80 or more of May's lawmakers were prepared to vote against them.
The opposition Labour Party's foreign affairs spokeswoman Emily Thornberry told the Financial Times her party was set to vote against any Brexit deal and the lack of a viable exit from the EU would force May from office before Christmas. (Additional reporting by Philip Blenkinsop Editing by Matthew Mpoke Bigg)
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