Will they won't they: Brexit uncertainty continues; sources claim deal is imminent

Brussels/London, December 23

A senior European diplomat told Reuters on Wednesday that a Brexit trade deal was imminent and could be clinched within hours, raising hopes that Britain and the European Union can avoid a turbulent economic rupture in just eight days.

There was no confirmation from Britain that a deal was about to be struck; the two sides have given a dizzying array of conflicting signals over recent days.

Since formally exiting the EU on January 31, the United Kingdom has been negotiating a free trade deal with the bloc in an attempt to ease its exit from the single market and customs union at the end of this year.

An accord would ensure that the goods trade that makes up half of annual EU-UK commerce, worth nearly a trillion dollars in all, remains free of tariffs and quotas.

The senior diplomat, who spoke on condition of anonymity, said EU member states would have to approve a provisional application of the deal with effect from January 1 because there was not enough time for the European Parliament to ratify it.

EU member states have started to prepare their procedure to implement any deal from January 1, three diplomatic sources in the bloc told Reuters.

“It seems the deal is pretty much there. It’s a matter of announcing it today or tomorrow,” said one EU diplomat.

The diplomat said the Council, which represents the member states in Brussels, had started preparations to enable a “provisional application”, or fast-track implementation.

Britain for its part said that two significant issues---fishing and competition---still remained to be resolved and that there had not been sufficient progress for a deal. The Commission declined to comment.

Sterling jumped more than 1% against the dollar on the Reuters report.

‘Serious issues remain’

A British minister however dismissed reports of already striking a deal saying serious disagreements about competition and fishing.

"I'm still reasonably optimistic but there's no news to report to you this morning," British Housing Secretary Robert Jenrick told Sky News amid speculation in London that a deal could be announced on Wednesday.

"There's still the same serious areas of disagreement whether that's on fisheries or the level playing field," he said. "But at the moment there isn't sufficient progress. It isn't a deal that the prime minister feels he can sign us up to."

Ultimately, Prime Minister Boris Johnson, who is grappling with a deepening COVID-19 outbreak and a border crisis at Europe's busiest truck port, will have to decide if the narrow deal on offer is worth signing up to.

Walking away might elicit applause from many Brexit supporters at home but would trigger severe trade disruption and end the EU divorce in acrimony.

An accord would ensure that the goods trade which makes up half of annual EU-UK commerce, worth nearly a trillion dollars in all, would remain free of tariffs and quotas.

Deal time?

The EU is making a "final push" to strike a trade deal with Britain, although there are still deep rifts over fishing rights, chief negotiator Michel Barnier said on Tuesday before meeting EU ambassadors in Brussels.

Barnier told the closed-door gathering that the UK's latest offer on sharing out the fish catch from British waters from 2021 was "totally unacceptable", according to EU diplomats who spoke on condition of anonymity.

The sources said Britain has offered a 35 per cent cut over three years in the value of the bloc's catch for demersal fish, like the sole, that live close to the sea floor or the shore.

But that would not cover pelagic fish like the mackerel that live in open waters, where the catch would be subject to annual negotiations.

EU sources also said there was no clarity on the crucial zone stretching six to 12 nautical miles from UK shores where many smaller French or Belgian vessels fish. The loss of such access could not be compensated in the open seas.

The European Union needs at least four days to carry out procedures ensuring any agreement is applied from January1, EU diplomatic sources said, meaning a deal is needed by early next week to avoid trade ruptures.

"I can't imagine that we won't find a deal," Austrian Foreign Minister Alexander Schallenberg told the country's APA news agency in an interview on Tuesday.

"I would consider it absurd if, after years of divorce negotiations, the UK ultimately jumps ship without a parachute and we suddenly no longer have any contractual relations at all," Schallenberg added.

--- Reuters