Britain and the European Union struck a pessimistic note in trade talks on Thursday, with a spokesman for Prime Minister Boris Johnson saying it was “very likely” that there would be no agreement unless the bloc changed its position “substantially”.
Just over two weeks before Britain finally leaves the bloc’s round, European Commission President Ursula von der Leyen was also downcast, saying it would be “very challenging” to overcome the “big differences” that remained.
Both sides have called on the other to move position to try to protect nearly a trillion dollars in trade from tariffs and quotas when a so-called transition period ends on 31 December.
Since Britain left the EU in January, talks have largely focused on two issues – the bloc’s fishing rights in British waters and the creation of so-called equal conditions that provide fair competition rules for both sides.
After a conversation between Johnson and von der Leyen about taking a stand on the talks, a spokesman for the British leader said: “The Prime Minister emphasized that the negotiations were now in a serious situation.”
“The time was very short and it looked very likely that an agreement would not be reached unless the EU position was significantly changed,” the spokesman added. “… He said that if no agreement could be reached, Britain and the EU would share as friends, with Britain to trade with the EU on Australian terms.”
Australia has no free trade agreement with the EU and most of their trade is in accordance with World Trade Organization rules.
Von der Leyen said she welcomed “significant progress”.
“Still, big differences remain to be bridged, especially when it comes to fishing. Bridging them will be very challenging, she said on Twitter, adding that the talks continued.
After the leaders’ talks, Britain’s chief negotiator David Frost said on Twitter that the situation was very serious and “progress seems blocked”.
The pound fell slightly against the dollar after the statements.
Earlier, British Home Secretary Priti Patel commented that talks had entered the “tunnel” – EU jargon for the final, secret make-or-break phase – and by EU chief negotiator Michel Barnier that good progress had been made. upset the financial markets.
But Michael Gove, a senior British minister responsible for implementing a previous divorce, told a parliamentary committee that the probability of reaching an agreement was “less than 50%”.
He added that if the British Parliament did not have time to pass the deal into law on December 31, “the clock is ticking and no agreement would have been reached and we will be in a world where we will trade on WTO terms”.
Gove later said he thought the last possible deadline to get a deal was the days immediately after Christmas.
Failure to reach an agreement on trade in goods can send shockwaves through the financial markets, damage European economies, tighten borders and disrupt supply chains across Europe and beyond.
Since Britain formally left the EU on 31 January, it has been in a period of transition during which trade, travel and business rules remain unchanged, with the country still within the EU’s customs union and internal market. Many deadlines have been missed in the talks to find a trade agreement.
Johnson, the face of the 2016 Brexit referendum campaign, has long said he will not accept a deal that does not respect British sovereignty after winning an election last year on a promise to “regain control”.
Gove said some of the remaining differences went “to the heart of (the government’s) mandate”.
An EU official who spoke at the level of anonymity said that disagreements over fishing had not yet been resolved, but that intensive talks on quotas and a transitional period were ongoing. Two EU diplomats and an EU official said they did not expect an agreement to be reached before Friday.
The European Parliament said it could hold an emergency plenary session at the end of December if an agreement is reached on Monday. If it came later, EU diplomats said the bloc could still put it in place from January 1 without the consent of the legislator.
EU von der Leyen said this week that there was now a “very narrow” path to agreement, although success was not guaranteed.
Johnson describes Brexit as a chance to build Britain into a completely independent economy that would be much more flexible than its competitors, and therefore does not want to be tied to the EU’s circulation and its rules in the coming years.
EU powers are worried Britain wants the best of both worlds – preferably access to lucrative EU markets, with the benefit of setting its own rules.