Brexit trade deal in balance as Boris Johnson prepares for make-or-break talks with EU chief

Hopes of a Brexit trade deal with the EU are hanging in the balance, as Boris Johnson prepares for talks with the European Commission president which could pull the plug on negotiations just 24 days ahead of the no-deal deadline.

As talks in Brussels dragged late into Sunday night, UK sources denied that a breakthrough had been made on the totemic issue of fisheries.

EU sources were quoted as saying that terms were all but finalised on access for EU boats to waters within the UK’s 200-mile exclusive economic zone, phased in over a transition period of five to seven years.

British concessions on fisheries would leave only two issues to resolve, in the shape of Brussels demands for a “level playing field” arrangement requiring the UK to observe EU rules and standards and the governance arrangements for the deal.

But a UK government source insisted: “There’s been no breakthrough on fish. Nothing new has been achieved on this today.”

Chief negotiators Michel Barnier and David Frost reconvened in Brussels on Sunday for “last roll of the dice” discussions to attempt to bridge “significant differences” remaining between the UK and EU.

They will report back to Mr Johnson and Commission president Ursula von der Leyen on Monday, before a phone call in which the two leaders will assess whether there is any point continuing efforts to break the deadlock before the no-deal deadline of 31 December.

By a highly symbolic coincidence of timing, the call will come as the House of Commons debates government legislation giving UK ministers powers to override last year’s withdrawal agreement with the EU, which has seriously undermined trust in the Johnson administration in Brussels.

Cabinet minister George Eustice said the UK was willing to keep talking “until there’s no point doing so any further”, but admitted the process was in “a very difficult position” and was “probably in the final few days”.

Any deal would require the unanimous approval of the EU’s 27 national leaders, due to hold their final summit of 2020 by video conference on Thursday. If that deadline is missed, it is unclear whether sufficient time remains for ratification by the European Council and European Parliament. 

Irish premier Micheál Martin said his “gut instinct” was that a deal was now a 50/50 possibility, but added: “I don't think one can be overly-optimistic about a resolution emerging.” Talks could run right up to Thursday’s summit, he suggested.

Mr Eustice poured cold water on the prospect of an eleventh-hour concession from Mr Johnson, saying that the UK “cannot compromise” on key issues like sovereignty and control over its laws and its fishing waters.

And a close ally of French president Emmanuel Macron said that Paris will not “give in to time pressure” and accept a deal which harmed its interests.

Europe minister Clement Beaune said France was ready to see the UK given leeway for some divergence from the EU on social, environmental and health standards, but said “corrective measures” should be available if Britain went too far.

There were warnings of “catastrophic” consequences for farmers and transport disruption lasting for up to 12 months if no free trade agreement is in place by the end of 2020, with Conservative former cabinet minister Damian Green saying that food shortages were a possibility.

Mr Eustice said that agreement had been close last week, but blamed eleventh-hour demands from the EU for a “setback” forcing a pause on Friday.

He dismissed as “ludicrous” EU proposals on fisheries, which he said would deliver guaranteed access to British waters in perpetuity, with only a small increase in the share of the catch going to UK boats.

He insisted the fisheries sector could cope with the tariffs resulting from no-deal, but appeared to accept this was not the case for farmers, who could see levies of as much as 85 per cent on beef and 62 per cent on lamb.

“The main species we export, the levels of tariffs on fish - unlike agriculture actually - are manageable,” he told BBC1’s Andrew Marr Show.

The Brexit-backing environment secretary accepted no-deal would have “some impact” on food costs, but claimed they would add less than 2 per cent to prices at the till, as they would be concentrated on products such as beef and pork which make up a relatively small part of the weekly shop.

National Farmers Union president Minette Batters said: “We've been clear for four years now that a no-deal for agriculture is catastrophic.. We (would be) priced out of the market. You’d be looking at enormous tariffs on every sector.”

Arriving in Brussels for last-ditch discussions with Mr Barnier, Lord Frost was playing his cards close to his chest.

“We’re going to be working very hard to try and get a deal,” he told reporters. “We’re going to see what happens in negotiations.”

After talks which stretched late into the evening, Mr Barnier was due to brief EU diplomats on progress in talks at a pre-dawn meeting in Brussels. The phone call between Mr Johnson and Ms von der Leyen will take place later in the day, but neither side was confirming if a final decision will be made then on whether a deal remains possible.

Ireland’s foreign affairs minister, Simon Coveney, said the legal agreement was “97 or 98 per cent” complete, insisting that “we are more likely to get a deal than not”.

He told RTE that the absence of a future relationship agreement would be “very, very costly and very, very disruptive for the UK and for Ireland” and made no political, economic or social sense in a world facing huge challenges from the Covid-19 pandemic.

“For all of those reasons, I think the negotiating teams and senior politicians will find a way of getting a deal here, but at the moment we are in a difficult place as we try to close it out,” said Mr Coveney.

But Mr Beaune left no doubt that Paris regards no-deal as a real possibility.

“In the coming days, we will have to decide either to continue to negotiate or go ahead with no deal,” he said. “Because if this is the case, it is better to know now than at Christmas.

“We will not give in to time pressure. We will not accept an agreement at all costs on the pretext that we are getting closer to the deadline.”

He recognised that German chancellor Angela Merkel, who holds the rotating presidency of the EU council until the end of December, wants a deal.

But he added: “She also defends our demands – and she knows the European market well enough to guess how the German economy would suffer from a bad deal.”

France has taken a hard line in the final days of negotiations on access for its fishing ships to UK waters.

But Mr Beaune indicated Paris was ready to accept some flexibility on level playing-field arrangements designed to stop the UK gaining competitive advantage by undercutting EU standards.

“The British want access to the single European market without constraints for their social, environmental or health standards, which is unacceptable,” said Mr Beaune. “For our part, we are ready to put in place a system in which a divergence of standards would be allowed but beyond which corrective measures would be taken.”

Failure to reach a free trade agreement by 11pm on 31 December would mean the UK leaving the EU single market and customs union on World Trade Organisation terms, requiring tariffs and quotas on a range of goods imports and exports.