No-Deal Brexit More Likely After Dinner Fails: Brexit Update
Talks Continue Until Sunday But Big Gaps Remain: Brexit Update
(Bloomberg) -- Negotiations between the U.K. and the European Union are on course to end without a trade deal amid fears on both sides that their disagreements are too wide to bridge, officials familiar with the talks said.
Wednesday night’s dinner between Prime Minister Boris Johnson and Ursula von der Leyen, the European Commission president, left their teams believing it may be impossible to find a compromise before time runs out. Officials on both sides said that while the meeting was cordial, there was no breakthrough. Barring a dramatic last-minute intervention, the more likely outcome now is a no-deal split on Dec. 31.
Negotiators are resuming their work on Thursday in Brussels, searching for a way to break the deadlock before Sunday, when the leaders are due to take a decision on whether to call time on the talks. The two sides could agree on a “friendly no-deal” and resume trade talks later in 2021, one EU official said.
Key Developments:
- The pound dropped by more than 1% against the dollar
- Negotiating teams to start work again on Thursday afternoon
- The EU published its contingency plans to minimize no-deal disruption
- Von der Leyen will brief EU leaders as summit begins in Brussels
| From Bloomberg Opinion: |
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| “Believing in a Sunday breakthrough increasingly feels like expecting a Christmas miracle (or, technically, a Hanukkah one),” Lionel Laurent writes. |
U.K. Border Plan a ‘Smugglers’ Charter’ (3:20 p.m.)
The government is planning emergency rules allowing it to temporarily waive some customs rules -- a measure the opposition Labour party branded a “smugglers’ charter.”
The measures, aimed at avoiding disruption when the Brexit transition period ends on Dec. 31, would apply for six months and allow waivers to granted for exports from Great Britain, though not from Northern Ireland. Government documents explaining the plan acknowledge “there may be risks associated with using these powers to implement any temporary waivers; for example, to border security.”
Treasury Minister Jesse Norman told lawmakers that the powers would only be used when “absolutely necessary” -- but refused guarantee that they won’t be extended beyond six months. Labour condemned ministers for forcing MPs to choose between border chaos or compromising safety.
U.K. ‘Will Look Closely’ at EU Contingency Plans (1:00 p.m.)
Boris Johnson’s spokesman, Jamie Davies, told reporters in London that the U.K. will closely scrutinize the EU’s contingency plans in case no deal is reached (see 10 a.m.).
While “we won’t leave any route to a fair deal untested,” he said, there are “obviously still major differences between the two sides.” He confirmed that the two sides’ chief negotiators, Michel Barnier and David Frost, would continue talks in Brussels this afternoon.
No Deal Looking Likely After Dinner (12:20 p.m.)
Wednesday night’s dinner didn’t change much of substances. according to officials with knowledge of the talks.
So far, the negotiations have been stuck on disagreements over the EU’s right to fish in British waters and the so-called level playing field rules for fair competition for business. There is still no sign of how the differences over the latter can be bridged, an EU official said.
Boris Johnson argues that, for reasons of sovereignty, Britain must not be forced to follow the EU’s competition rules as they evolve in future years. The EU says the U.K. must keep up with its changing regulations to protect the integrity of the bloc’s single market. Both sides have come to realize that it may be impossible to reach a compromise, an EU official said.
Former Brexit Minister Attacks EU Plans (11:24 a.m.)
David Jones, a former Brexit minister and a senior member of the European Research Group of rank-and-file Conservative MPs, reacted with anger to the EU Commission’s contingency plans (see 10 a.m.).
The measures are “effectively blackmail” and “piratical behavior,” he told the Daily Telegraph. “I’m pretty sure the response the prime minister will give is that this country doesn’t buckle in the face of intimidation,” he told the newspaper.
Traders Brace for Turbulence (11:20 a.m.)
While many Brexit deadlines have come and gone, there are signs traders are taking the latest one seriously. Options traders are bracing for turbulence around Sunday, with the spread between one-week and two-week implied volatility now at its widest in a year.
Luxembourg Premier: No Deal Better Than a Bad Deal (10:55 a.m.)
Xavier Bettel spoke to reporters as he arrived at a meeting ahead of an EU leaders’ summit later on Thursday.
“I prefer no deal than a bad deal,” he said. “Already it’s bad for the EU that U.K. left, but it’s even worse for the U.K., so we have to have a deal where we are all able to have the guarantees” needed and “find and a proper way to get out of this situation.”
Irish PM: Competition a Bigger Problem Than Fish (10:54 a.m.)
Irish Prime Minister Micheal Martin told reporters at a pre-summit meeting in Brussels that he can see a solution on fishing rights -- but the key to a deal will be whether there’s a breakthrough on rules to ensure fair competition.
“It’s the level playing field that’s the key area,” Martin said. “Fish is a serious issue. But my sense is there’s a possibility of resolving those issues in relations to fish. Level playing field, dispute resolution mechanism is tied into that. That’s where the key negotiations will focus on.”
U.K.’s Mordaunt Still Optimistic (10:45 a.m.)
U.K. Cabinet Office Minister Penny Mordaunt told the House of Commons that she is still hopeful an accord can be reached even though the two sides “remain far apart.”
“Even in these gloomy times, I am still optimistic a deal can be secured,” she said. Britain will be creative and determined, she said, as it tries to overcome three major disagreements with the EU over fishing, the level playing field, and the governance of any agreement.
“We are working tirelessly to get a deal -- but we cannot accept a deal at any cost,” Mordaunt said. “The only deal that is possible is one that is compatible with our sovereignty.”
EU Publishes Contingency Plans (10 a.m.)
The EU publish its contingency plan week to keep flights in the air and trucks on the road if it fails to reach a trade agreement with Britain -- a sign the bloc sees that outcome as a distinct possibility.
The measures will allow for basic and air road connectivity for six months, provided the U.K. does the same for EU aircraft and hauliers. They will also allow aviation safety certificates to continue to cover certain products in EU planes, so aircraft aren’t grounded.
The bloc also proposed creating a legal framework to allow British and EU fishing boats continued access to each other’s waters for 12 months after the end of the transition period on Dec. 31, or until the bloc signs a fisheries agreement with the U.K.
McGuinness Sees ‘Glimmer of Hope’ (8:45 a.m.)
Ireland’s European Commissioner, Mairead McGuinness, said both sides now have a better understanding of each other’s position following Wednesday’s dinner. A “breakthrough” from the meeting had never been expected, she told RTE.
“There will be a renewed effort by the negotiators to try and bridge significant gaps,” she said. “There is a deal to be done.”
Raab: Sunday’s Deadline Is Real (7:45 a.m.)
Foreign Secretary Dominic Raab said it’s “unlikely” negotiations will go past Sunday, but added: “I can’t rule anything out.” Touring BBC and Sky television studios on Thursday, Raab insisted he could “never quite say never” to talks beyond the weekend but that “there must come some point of finality for this.”
There are still “significant differences” in the two sides’ positions and the EU will need to move “substantially” before a deal can be reached, he said.
France: We Are Ready for Jan. 1 (7:40 a.m.)
French Junior Minister for EU Affairs Clement Beaune visited the Paris train station from where Eurostars leave. “I think we can say that we are ready” for Jan. 1, when the Brexit transition period ends, Beaune said.
There will be changes for passengers whether or not there is an agreement with the U.K., the minister added. The passport of passengers will have to get a stamp whenever they cross the borders, potentially creating extra delays.
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