Post-Brexit deal in 'serious situation', warns UK PM as talks go on

UK Prime Minister Boris Johnson has warned that a no-deal Brexit is now a "very likely" outcome as a trade agreement with the European Union (EU) remained in a “serious situation” just under two weeks before the December 31 deadline for the end of the transition period.

The negotiators on both sides resumed discussions on Friday but after a phone call with European Commission President Ursula von der Leyen on Thursday night, Johnson declared that a deal remains out of reach unless the EU is willing to change its stance significantly.

The extent of fishing rights in each other’s waters and the levels of state aid permitted in domestic industries in order to prevent unfair competition remain the main stumbling blocks to an agreement.

“The prime minister underlined that the negotiations were now in a serious situation. Time was very short and it now looked very likely that agreement would not be reached unless the EU position changed substantially,” a Downing Street spokesperson said after the two leaders’ stock-take phone call.

The UK claims it has been making every effort to accommodate reasonable EU requests on the level playing field, but even though the gap had narrowed some fundamental areas remained difficult.

“On fisheries he stressed that the UK could not accept a situation where it was the only sovereign country in the world not to be able to control access to its own waters for an extended period and to be faced with fisheries quotas which hugely disadvantaged its own industry. The EU’s position in this area was simply not reasonable and if there was to be an agreement it needed to shift significantly,” the spokesperson said.

“The prime minister repeated that little time was left. He said that, if no agreement could be reached, the UK and the EU would part as friends, with the UK trading with the EU on Australian-style terms. The leaders agreed to remain in close contact,” the spokesperson added.

An Australian-style exit from the 27-member economic bloc would effectively mean no deal, with both sides trading on World Trade Organisation (WTO) norms and without the considerable quota-free, tariff-free regime that could be in place with a deal.

In her statement after the phone call, Von Der Leyen welcomed “substantial progress” on many issues.

"Yet big differences remain to be bridged, in particular on fisheries. Bridging them will be very challenging,” she said.

The European Parliament has set a weekend deadline for a post-Brexit trade deal to be agreed, as it warned that members of the European Parliament (MEPs) will not have time to ratify an agreement this year unless it is ready by Sunday night.

EU Chief Negotiator Michel Barnier told the Parliament on Friday morning that just hours remain and that the moment of truth was fast approaching.

Back in the UK, members of Parliament (MPs) are now on official Christmas break, expected back only in the New Year. They could be recalled in the event of a deal to get the requisite parliamentary go-ahead as an agreement needs ratification on both sides by December 31 unless a compromise is reached over the legality of the final text.

The UK and EU are now in a so-called “extra mile” deadline phase after repeated timelines have been missed amid significant divergences on key areas.

The UK had voted to leave the EU in a referendum in 2016 and under the Withdrawal Agreement, or the so-called divorce pact, they have until December 31 to define their future trading arrangements or part with no deal and start trading on WTO terms with tariffs in many sectors of the economy from January 1, 2021.