The European Union's chief Brexit negotiator, Michel Barnier, said "significant divergences persist" between the two sides as he travelled to London for further talks amid rising concern that insufficient time remains to prevent a damaging no-deal scenario on January 1st.
Announcing that he and his team were no longer in quarantine after a Covid-19 case in a senior EU negotiator disrupted the talks, he said “physical negotiations can continue”.
His UK counterpart, David Frost, said a deal was “still possible”, but only if the EU agreed to something that would allow Britain to have an autonomous state aid system and control its fishing waters.
“Some people are asking me why we are still talking. My answer is that it’s my job to do my utmost to see if the conditions for a deal exist. It is late, but a deal is still possible, and I will continue to talk until it’s clear that it isn’t,” Mr Frost said.
“But for a deal to be possible, it must fully respect UK sovereignty. That is not just a word – it has practical consequences. That includes: controlling our borders; deciding ourselves on a robust and principled subsidy control system; and controlling our fishing waters.
Pressure for clarity
“We look to reach an agreement on this basis, allowing the new beginning to our relationship with the EU which, for our part, we have always wanted. We will continue to work hard to get it – because an agreement on any other basis is not possible.”
EU officials are increasingly concerned that it may not be feasible to ratify and implement any deal that can be reached, as the time considered to be the “last moment” to strike a deal passed weeks ago. Pressure for clarity is rising from business groups.
The Irish Government has warned that discussions on the stumbling blocks standing in the way of a deal are "very, very difficult", while earlier this week European Commission president Ursula von der Leyen said it was unclear whether one could be reached.
"The next phase is going to be decisive. The European Union is well prepared for a no-deal scenario but of course we prefer to have an agreement," Ms Von der Leyen told the European Parliament on Wednesday.
Contested clauses
The EU side believes that prime minister Boris Johnson must make a decision to move in order for a deal to be reached. The bloc has also warned that a deal cannot be reached if the London government persists with contested clauses of its Internal Markets Bill, which override parts of the withdrawal agreement struck last year that were designed to avoid a hard border on the island of Ireland.
Any deal must be ratified by Westminster and the European Parliament, where MEPs are concerned that the timetable is becoming difficult for the agreement to be translated into EU languages, scrutinised and voted on by the end of the year.
If no trade deal can be struck, tariffs will automatically come into force on trade between the UK and EU, including punishing levies on vital Irish industries such as beef and dairy. The legal basis for many aspects of the economic relations between the EU and its former member will dissolve overnight, something expected to cause significant damage and disruption.
Even if a deal can be found, customs declarations will be required on trade between the UK and EU and there will be checks on goods travelling from Britain to Northern Ireland. Governments have warned companies to check their supply chains and familiarity with customs to ensure they are prepared.
