EU Rebuffs Latest U.K. Effort to Unblock Deadlocked Brexit Talks

(Bloomberg) -- The European Union rebuffed Britain’s latest effort to unblock their deadlocked trade talks, a sign that the eight-month long negotiations will struggle to hit a key milestone this week.

The U.K. had sought to break the logjam by submitting a new round of proposals on how its state-aid rules will work after Brexit, according to two people familiar with the negotiations. The issue is one of the biggest obstacles to an accord.

But the British offer still doesn’t go far enough, according to two officials in Brussels, who said insufficient progress has so far been made for the talks to head into the intense final phase, known as the tunnel, at the end of this week.

That could change, as long as the British show willingness to compromise further in this week’s discussions between the EU’s chief negotiator, Michel Barnier, and his opposite number, David Frost, according to an official in Brussels.

Alternatively, Barnier could call for further rounds of talk, but that could make it make it more difficult to reach a deal before Prime Minister Boris Johnson’s self-imposed deadline of mid-October.

Risk of No Deal

It’s possible that target could slip as the two sides try to hammer out a deal. If Britain crashes out of the EU’s single market at the year-end without a trade deal in place, it could poison relations with the bloc for a generation and leave business grappling with the cost and disruption of trade tariffs and quotas.

The two main obstacles to an agreement remain deciding which of the EU’s state-aid rules the U.K. will have to follow after leaving, and what access fishing boats from the bloc will have to British waters.

The document on state aid is among five confidential draft legal texts the U.K. submitted to the bloc. The others address fisheries, law enforcement, energy and mobility and social-security coordination.

©2020 Bloomberg L.P.