Hopes of a post-Brexit trade deal were fading last night as the UK accused the EU of tabling fresh demands at the last minute.
With the clock ticking to strike an agreement before Britain severs ties with the bloc on December 31, crunch talks in London are going right down to the wire.
They appear to have snagged yesterday after a sandwich-fuelled sit-down between the two teams, led by Lord Frost and Michel Barnier, ended in stalemate.
A senior UK Government source pointed the finger at Brussels and said: ‘At the 11th hour, the EU is bringing new elements into the negotiation.
‘A breakthrough is still possible in the next few days but that prospect is receding.’
State aid rules and access to British waters for European fishermen have been the main sticking points preventing an agreement.
If no deal is brokered before the transition period ends, the UK will start trading with the EU on World Trade Organisation terms, meaning the erection of tariff barriers.
Talks appear to have snagged this evening after a sandwich-fuelled sit-down between the two teams, led by Lord Frost and Michel Barnier, ended in stalemate
Sandwiches arrive at the department for business, where the talks are taking place
What are the main sticking points in post-Brexit trade talks?
There are three main areas in which the UK and the EU have been unable to reach agreement.
They are post-Brexit fishing rights, the so-called ‘level playing field’ on rules and the future governance of the deal.
Fishing rights: The UK will become an independent coastal state from January 1 when the transition period ends. This means it will be in control of its waters, with British fishermen set to be given priority. The EU wants to maintain access to the UK’s waters for its trawlers but the two sides have been unable to agree on the specifics. In simple terms the EU wants to keep more of the UK’s fish than the UK is willing to allow. Fishing is viewed by the UK as the biggest obstacle to a deal.
The ‘level playing field’: The EU wants the UK to agree to stick closely to rules made in Brussels in the future on things like state aid and workers’ rights in order to prevent British businesses having an unfair advantage over their competitors on the continent. Britain does not want to be too firmly tied to EU rules because it views the freedom to act unilaterally on such issues as one of the main benefits of Brexit.
Governance of the deal: The two sides are struggling to agree how the terms of the trade deal would be enforced should one party fail to fulfil its commitments. Much of the disagreement centres on the role of the European Court of Justice.
Relations could be further soured next week when Boris Johnson ploughs ahead with legislation allowing ministers to rip up the divorce deal he signed with Brussels last year.
MPs will vote on the UK Internal Market Bill on Monday, giving ministers the power to break international law by ignoring provisions in the Withdrawal Agreement relating to Northern Ireland.
The EU has already taken the first steps in a legal action over the legislation.
The Prime Minister’s official spokesman said: ‘We have been clear that those clauses represent a legal safety net to protect the integrity of the UK’s internal market and to protect the huge gains of the peace process.’
The Government will also introduce the Taxation (Post-Transition Period) Bill, which reportedly includes measures to override parts of the divorce deal struck by the Prime Minister and the EU in 2019.
The Taxation Bill will include ‘measures which are required to prepare for the end of the transition period’.
Mr Barnier said Wednesday that talks were reaching a ‘make-or-break moment’, as a tower of pizza boxes was delivered to the Department for Business, Energy and Industrial Strategy where the discussions are being held.
Yesterday the negotiators changed their order to sandwiches as they continue to try to break the deadlock on crunch issues.
In an attempt to break the deadlock, Mr Barnier said Mr Johnson had lowered his demands by asking to get back only 60 per cent of the fish that EU boats currently catch in British waters, down from 80 per cent.
At the same time, the EU has signalled it will give in to the Prime Minister’s request to negotiate fishing quotas annually in the same way Brussels does with Norway.
Irish foreign minister Simon Coveney said this morning he believed there is a ‘good chance that we can get a deal across the line in the next few days’ as he warned there will be ‘no extra time’.
Downing Street at lunchtime said ‘intensive’ talks are ongoing and the two sides are ‘continuing to work hard to resolve the differences that remain’.
A large stack of takeaway pizza was delivered to negotiators late last night amid growing hopes of a post-Brexit trade deal being struck between the UK and the EU
Michel Barnier, the EU’s chief negotiator, said yesterday that talks were reaching a ‘make-or-break moment’
UK officials told Politico this morning ‘we are still going’ and it is ‘still not clear if we are going to get there’ but there is growing optimism a deal could now be near.
During video conference calls with European diplomats and MEPs yesterday, Mr Barnier said there was still no guarantee a trade deal will be agreed.
‘I do not sincerely know if we can reach a deal,’ the senior European Commission official told them.
‘We are quickly approaching a make-or-break moment in the Brexit talks. The next hours and days will be decisive.’
Downing Street said last night that Mr Johnson remains ‘optimistic’ that Britain can secure a post-Brexit trade agreement with Brussels.
His press secretary Allegra Stratton added: ‘The talks are right now ongoing and he has greatest confidence in [UK chief negotiator] David Frost and the team.
‘He is optimistic but he has also always said that he is confident and comfortable that we would be okay without a deal.
‘If a deal can be struck that is all to the good but he is also confident that we can move towards trading on what he calls Australia terms.’
A failure to agree and implement a trade deal before the end of the ‘standstill’ post-Brexit transition period would force the EU and the UK to trade on basic World Trade Organisation terms from January 1 which would mean tariffs being imposed on goods.
EU diplomats conceded last night that even if the two sides do manage to reach an agreement, the ratification process may not be plain sailing, with the possibility that individual member states could still attempt to block it.
‘We need to find a compromise where the UK can say they have won, and the EU can say they haven’t lost,’ said one source close to the talks.
Boris Johnson is said to have lowered his demands on post-Brexit fishing rights in a bid to break the deadlock
Rows over access to British waters have been one of the most significant remaining stumbling blocks in the negotiations during the past few weeks.
At present, the Common Fisheries Policy dictates how much British fishermen can catch and where, and fishermen have often complained they do not get a fair share of what is caught in UK waters.
According to EU sources, Mr Barnier said Downing Street is now asking to get back 60 per cent of the fish currently caught by European boats compared with 80 per cent previously. The EU has so far offered the repatriation of around 15 to 18 per cent of catches.
Fishing accounts for just 0.12 per cent of the UK’s GDP but is seen as hugely symbolic in Brexit talks.
British fisherman argue their industry was sacrificed to secure the country’s place in the European Economic Community in 1973.