Britain still has no trade deal with the EU - less than a month before Brexit properly starts on January 1.
Boris Johnson has warned it is "very, very likely" that the UK will fail to strike a post-Brexit trade deal with the EU, and is warning Brits to prepare despite talks continuing beyond a Sunday deadline.
The Prime Minister said he was "hopeful" that progress could be made in talks but stressed that the two sides remained stuck on fisheries and the so-called level-playing field.
If we don't make enough progress on these key issues it could be curtains for a trade deal.
That could mean we crash out of EU rules without a trade pact - with tariffs and paperwork being slapped on much of the UK’s £660bn a year in trade with the EU from January 1.
Food could become more expensive in the supermarket and deliveries could be held up by bureaucracy at the border.
The Budget watchdog says it could cut GDP by 2% in 2021 and delay our Covid recovery by almost a year.
It’s a far cry from when Boris Johnson said in 2017: “There is no plan for no deal because we are going to get a great deal.”
And it’s hardly the “oven-ready” deal the Prime Minister promised the British people he had in last year’s election.
So what are the three sticking points? Why hasn’t the so-called “oven-ready deal” been as tasty as we hoped? And when might the deadlock end?
Here’s what you need to know.
What is the deal we’re trying to agree?
The UK is trying to agree a Free Trade Agreement with the EU for when the Brexit transition period ends on December 31.
This would allow us to enjoy cheaper, easier trade with our nearest neighbours than if we crashed out of the EU with no pact.
While no deal will be as seamless as EU membership, Brexiteers say an FTA is a way of having our cake and eating it.
We could make our own laws while also paying smaller tariffs and having less bureaucracy than a nation with no trade deal.
If we don’t get a deal, EU trading rules will end on New Year’s Eve and slap billions in tariffs overnight on essential goods.
Britain is also negotiating trade deals with dozens of other countries like Japan but the EU is far, far more important. In 2018 the EU accounted for almost half of UK trade - £660bn. The second-placed US counted for £202bn. Japan, £29bn.
And our economy has been used to tariff-free EU trade for decades, meaning any change on January 1 could be a big shock.
How is this different from Boris Johnson’s ‘oven-ready deal’?
You may remember Boris Johnson won the election by promising to ‘get Brexit done’.
He said: “We’ve got a deal that’s oven-ready. We’ve just got to put it in at gas mark four, give it 20 minutes and Bob’s your uncle.”
But his “oven-ready” deal was only the Withdrawal Agreement to leave the EU.
That agreement didn’t actually guarantee how any trade would work after 2020.
Call it clever wording, call it lies - however you look at it, the ‘oven-ready’ deal doesn’t help us much now.
It’s like he put an empty pie casing in the oven to blind-bake, but hadn’t mixed any of the filling together yet.
Why don’t we have an agreement yet?
The EU and UK have been negotiating an agreement since Spring, but since about the summer talks have been deadlocked.
They are stuck on three issues - fishing rights, the ‘level playing field’ and how any deal will be policed (more of this below).
Talks missed deadlines of mid-October and mid-November, before coming to what the UK claimed was almost a breakthrough.
But the EU then “added a whole load of additional demands”, according to Environment Secretary George Eustice. UK officials believe French President Emmanuel Macron was behind the new harder position.
Adding to this, there’s a row over Boris Johnson planning to break international law.
The UK Internal Market Bill - due in the Commons on Monday - will give the UK ultimate power over the rules for goods travelling from Great Britain to Northern Ireland.
This would breach the Withdrawal Agreement (the ‘oven-ready deal’) which the UK and EU signed last year. Back then, Boris Johnson promised to arbitrate those rules via a joint committee.
When will the logjam end?
Boris Johnson and European Commission President Ursula von der Leyen have now missed several self-imposed deadlines for a deal since October - and notably did not set a deadline the most recent time round.
There is nothing to stop talks continuing even after Christmas Day - although a trade deal needs to be ratified by the UK and EU Parliaments by December 31.
Any deal ideally wanted to be agreed by EU leaders at a summit on December 11 but that didn't happen.
The three sticking points explained
Fishing
The UK and EU each want as much fish as possible from UK waters after December 31.
But it’s not as simple as just barring all EU fishermen. There needs to be a negotiation - otherwise UK fleets would struggle to access EU waters, or sell their fish into EU markets.
The first key point is quotas - whether UK boats will be allowed to catch more fish in their own waters than they do now.
In 2012-16, 56% of the fish in UK waters was caught by EU boats and 44% by UK boats.
Reports suggested the EU was prepared to return 18% of its current quotas to UK fishermen, but Britain said this wasn’t enough and wanted around 80%.
The other key point is over access - both to the territorial waters within 12 miles of UK soil, and a 200-mile economic exclusion zone around its coastline.
UK sources say the EU essentially wanted the same access as it enjoys now under the Common Fisheries Policy. That was unacceptable to UK officials, who say they want to control access to UK waters - even if, in reality, EU fleets will be let in anyway.
It's thought the UK was offering a three-year transition period to new access arrangements, but the EU wanted 10 years.
The level playing field
The "level playing field" refers to how closely we follow EU rules in the future - and it's the area where the EU is accused of mounting an 11th-hour ambush.
The UK wants to be free to set its own laws in areas like labour, environment, climate, sustainable development and subsidies for businesses (known as “state aid”).
Environment Secretary George Eustice said the UK should be allowed to “give an undertaking” that it won’t “renege” on environment or other standards, without having to sign up to pre-clearing its regulations with the EU.
The UK was prepared to agree these “non-regression". But under EU plans tabled in early December, UK sources say Britain would have been locked into "equivalence", "mirroring" EU rules in future.
UK officials made clear this was unacceptable.
The EU later dropped its demand and offered an olive branch - saying the UK will not have to automatically follow all future EU rules on areas like the environment in future.
Instead Britain could face tariffs if and when the country decides to follow a different path.
But UK officials fear that under this plan, Britain could be stung with surprise "lightning tariffs" over which the country has no control.
Foreign Secretary Dominic Raab told Sky News: “I don’t think we want a nuclear style reaction where tariffs go up and we’re back in the same old drama or soap opera every couple of years or even sooner just because there’s a particular issue around a particular sector.”
Reports out of Brussels suggest the EU was willing to compromise on this issue. Under a compromise the UK wouldn't face automatic penalties, with any new tariffs instead being discussed on a case-by-case basis.
How the deal is policed
The final key dispute is about how any future disagreements between the UK and the EU on trade are resolved.
Last year’s withdrawal agreement set up independent arbitration panels to consider any alleged breaches of the divorce deal, with issues of EU law to be referred to the European Court of Justice.
UK negotiators were adamant that the EU's top court must have no role this time, and say this is no longer a live issue.
It's not yet clear how any future clashes will be policed, but the UK side is confident things can fall into place if the two other flashpoints are resolved.
Will a Brexit trade deal solve all our problems?
No.
Even if we get a trade deal, there will still be new bureaucracy and costs for businesses, because we’re leaving the EU’s single market and customs union.
There will also be new red tape for holidaymakers on things like renewing your passport, driving and taking pets abroad.
You can read more about these here.
