British Prime Minister Boris Johnson and European Commission President Ursula von der Leyen are expected to hold another crisis call, as talks over a post-Brexit trade deal between the United Kingdom and European Union go down to the wire.
The pair are set to speak on Wednesday or Thursday, sources within the bloc told Reuters news agency, in a bid to resolve continuing disagreements over fishing rights and competition rules.
Both sides are keen to avert a turbulent divorce at the end of this year, when the Brexit transition period ends on December 31.
But while they say they are keen to strike an agreement on future trading relations before then, negotiations have been mired in deadlock since the UK formally left the EU on January 31.
On Wednesday, speculation mounted that a deal could be announced imminently, with Irish Prime Minister Micheal Martin suggesting an agreement was, on balance, more likely to be brokered than not, in spite of a “wide” gap over fish still separating the pair.
“On balance, I think given the progress that has been made that there should be a deal,” Martin told national broadcaster RTE.
“A no-deal would be an appalling shock to the economic system on top of COVID-19.”
‘Serious areas of disagreement’
UK officials also expressed hope a deal could be struck but warned significant divisions continued to hamper the talks.
“I’m still reasonably optimistic but there’s no news to report to you this morning,” Housing Secretary Robert Jenrick told UK broadcaster Sky News.
“There’s still the same serious areas of disagreement whether that’s on fisheries or the level playing field,” he added. “At the moment there isn’t sufficient progress. It isn’t a deal that the prime minister feels he can sign us up to.”
Johnson, who is also grappling with a deepening COVID-19 outbreak and a border crisis at Europe’s busiest truck port, has claimed the UK will “seize all the opportunities Brexit brings” and “prosper mightily” with or without a trade deal.
But the UK’s financial watchdog, the Office for Budget Responsibility (OBR), has forecast a four-percent drop in national economic output in the long run as a result of the UK’s departure from the EU, even in the event of a free trade agreement.
A no-deal scenario – under which the UK and EU would be forced to default to the World Trade Organization (WTO) rules from January 1 – would wipe an extra two percent off the UK’s economic output in 2021 and drive up inflation, unemployment and public borrowing, according to the OBR.
WTO rules would bring financial tariffs, quotas and other regulatory barriers to trade into play, potentially affecting hundreds of billions of pounds worth of annual trade between the UK and the EU.
A deal would mean a less chaotic breakup, but both sides will still need to get any agreement sealed approved by their respective parliaments.
The UK Parliament would likely sign off on any deal before the year ends, because Johnson’s ruling Conservative Party has a strong majority in the legislative body.
But things are more complicated on the EU side, with the leaders of its 27 member states required to approve of any agreement before it is sent to the European Parliament for its consent.
It is not clear if there is sufficient time for that process to be completed before December 31, although EU law does include a provision for agreements to be signed and applied provisionally, without its parliament’s consent.