Negotiations between the EU and the U.K. are on course to end without a trade deal barring a dramatic last-minute intervention, according to officials with knowledge of the discussions.
Wednesday night’s dinner between Prime Minister Boris Johnson and Ursula von der Leyen left officials on both sides expressing concern that it may be impossible to reconcile their differences.
The officials said that while the mood of the meeting in Brussels was cordial, it didn’t change much of substance — something that needs to happen with only days remaining to find a deal.
Negotiators from both sides will spend the coming days searching for a breakthrough before the latest deadline, set for Sunday. So far, their discussions have been deadlocked over disagreements on the EU’s right to fish in British waters and the so-called level playing field for business.
There is still no sign of how the differences on the latter issue can be bridged, an EU official said. The U.K. says that, for reasons of sovereignty, it must not be forced to follow the bloc’s competition rules as they change. The EU says Britain must to protect the integrity of the bloc’s single market. Both sides have come to the realization that such a divide might be unbridgeable, the EU official said.
If an accord isn’t reached by the end of the year, businesses and consumers will be hit by additional costs and disruption as tariffs and quotas are imposed on trade with the U.K.’s biggest and closest commercial partner.
The pound led declines among major currencies on Thursday, falling as much as 1% to $1.3262. Options traders are bracing for turbulence around the Sunday deadline, with the spread between one-week and two-week implied volatility at the widest in a year.
Separately, the European Commission published its contingency plans in case no deal is signed. The bloc said these were only intended to ensure basic air and road connectivity between the EU and the U.K. and to allow for the possibility of reciprocal fishing access.
