UK, EU leaders to meet face-to-face to try to seal Brexit trade deal

By Gabriela Baczynska, John Chalmers and Elizabeth Piper

BRUSSELS/LONDON (Reuters) - British and EU leaders will meet face-to-face to try to seal a post-Brexit trade deal after failing again to narrow their differences on Monday, increasing the chance of a disorderly parting of ways at the end of the month.

With just over three weeks before Britain completes its journey out of the bloc, a senior UK government source said there was "every chance we are not going to get there" and EU officials said, if anything, negotiations had gone backwards.

Since Britain left the European Union in January, the two sides have been stuck over three issues, raising the prospect of what many businesses say is their nightmare scenario - no agreement to govern around $1 trillion in annual trade.

Prime Minister Boris Johnson will travel to Brussels to meet European Commission President Ursula von der Leyen, the timing of which has yet to be confirmed, in what some say will be a last roll of the dice to secure a trade deal.

But he is not expected to time his trip to coincide with an EU summit on Thursday and Friday.

Irish Foreign Minister Simon Coveney said negotiators face a Wednesday deadline, ahead of the summit, to prevent a "no-deal" scenario when the UK leaves the EU's orbit on Dec. 31, which would hit both sides' economies and compound the pain of the COVID-19 pandemic.

Leaders of the 27 EU member states have agreed to step up contingency planning for the effects of a "no deal" on their economies when they meet for the summit.

"The conditions for an agreement are not there due to remaining differences on critical issues," von der Leyen and Johnson said in a joint statement after their call, which followed an equally fruitless conversation on Saturday.

"We asked our chief negotiators to prepare an overview of the remaining differences to be discussed in person in the coming days," they said. The EU Commission spokesman said Johnson would travel to Brussels for the meeting.

A senior UK government source described talks as being "in the same position now as they were on Friday. We have made no tangible progress".

"It's clear this must now continue politically. Whilst we do not consider this process to be closed, things are looking very tricky and there's every chance we are not going to get there," the source said.

POUND TUMBLES

The British pound tumbled, showing how investors are losing confidence that a deal will be reached.

Britain, which joined the EU in 1973, formally left the bloc on Jan. 31 but has been in a transition period since then under which rules on trade, travel and business remain unchanged.

For weeks, the two sides have been haggling over fishing rights in British waters, ensuring fair competition for companies and ways to solve future disputes. Both have called on each other to compromise to get a deal over the line.

Failure to secure an agreement would clog borders, upset financial markets and disrupt delicate supply chains across Europe and beyond as the world tries to cope with the vast economic cost of the COVID-19 pandemic.

With just days left to reach an agreement and get it approved, most EU and UK sources agreed it was now time for the political leaders to step in and make the decision on whether to shift their positions enough to allow for a breakthrough.

In an olive branch to the EU, Britain said it could remove clauses in legislation that would breach its Brexit deal, signed just months ago with the EU, and would review provisions in another bill if talks on the Withdrawal Agreement progress.

Britain admits the clauses breach international law but says they are an essential safety net that would ensure the integrity of the United Kingdom.

(Additional reporting by William James, Costas Pitas, Michael Holden, Kate Holton, Sujata Rao-Coverley, Paul Sandle and Sarah Young in London, and Conor Humphries in Dublin, Writing by Guy Faulconbridge and John Chalmers, Editing by Timothy Heritage, William Maclean and Nick Macfie)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)