The transition period ends in weeks, but the UK and EU have still not reached a trade deal.
British and European Union negotiators are set to meet in Brussels in a last-ditch attempt to strike a post-Brexit trade deal before a transition period ends on December 31.
British Prime Minister Boris Johnson and European Commission President Ursula von der Leyen spoke on Saturday and instructed their teams to resume talks after they were paused on Friday.
In a joint statement after their call, Johnson and von der Leyen said no agreement was feasible if disagreements on the three thorny issues of governance, fisheries and competition rules, known as the level playing field, were not resolved.
“This is the final throw of the dice,” a British source close to the negotiations said.
The EU’s negotiator Michel Barnier and his UK counterpart David Frost will resume their talks later on Sunday. “We will see if there is a way forward,” Barnier tweeted.
Meanwhile, British media reports said the UK cabinet ministers would back Johnson over a no-deal Brexit.
A total of 13 cabinet ministers, including eight who opposed Brexit, said they would support a no-deal scenario if Johnson concludes that is necessary, The Times reported on Sunday.
Johnson will reportedly lobby European leaders before his next phone call with von der Leyen on Monday evening.
The 27 leaders of EU member states will gather in Brussels on Thursday for a two-day summit planned to tackle their own budget dispute, which will now once again be clouded by Brexit worries.
While much has been agreed, the sides cannot close out the thorniest debates over fishing rights, fair-trade rules and an enforcement mechanism to govern any deal.
Britain formally left the EU in January, nearly four years after a referendum on membership that split the nation down the middle and two months after Johnson won an election touting what he claimed was an “oven ready” Brexit deal.
The UK is bound to the EU’s tariff-free single market until a post-Brexit transition period expires the end of the year – an immovable deadline by which time the two sides must try to agree on the exact nature of their future relationship.
Without a deal, the bulk of cross-Channel trade will revert to World Trade Organization terms, a return to tariffs and quotas after almost five decades of close economic and political integration.
Talks throughout this year have finalised most aspects of an agreement, with Britain set to leave the EU single market and customs union, but the three core issues are unresolved.
Johnson has insisted Britain will “prosper mightily” whatever the outcome of the talks, but he will face severe political and economic fallout if he cannot seal a deal.
“If we fail to get an agreement with the European Union, this will be a serious failure of statecraft,” influential Conservative British MP Tom Tugendhat told the Lowy Institute in an interview published on Saturday.
European capitals have remained remarkably united behind Barnier through the fraught Brexit process, but some internal fractures have begun to surface.
On Friday, France threatened to veto any deal that falls short of their demands on ensuring fair trade and access to UK fishing waters, where they have demanded a durable agreement, whereas Britain wants frequent renegotiations.
“We know that 100 percent access to fishing waters in the UK maritime zone is finished,” European Affairs Minister Clement Beaune told le Journal du Dimanche.
“But we need lasting access. The British can’t have total access to our EU single market and exclude fish.”
Belgium, the Netherlands, Spain and Denmark share Paris’s concerns that the EU side could give too much ground on rules to maintain competition.
There are just days left to finalise a deal, with an EU leaders’ summit on Thursday looming large and the European Parliament repeatedly insisting it needs time to evaluate and ratify any compromise.