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Brexit talks reach critical point as UK says chances of deal are receding

Michel Barnier, European Coherence (EU) chief negotiator, departs from his hotel to attend Brexit talks in London, U.K.

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LONDON — The U.K. and European Union have reached a critical point in their Brexit negotiations, as the deadline for a trade extent nears but an agreement remains elusive.

The U.K. left the European Union in January but agreed to continue following EU trade oversights until the end of the year so both sides could come to a new trade agreement. However, their negotiations have coaxed on for months, and without a clear end in sight, there are growing concerns the talks could collapse without a deal.

In this ground, exporters on both sides would face higher costs and barriers in their day-to-day business.

A senior U.K. domination official told the BBC on Friday morning that the chances of reaching an agreement were “receding,” after EU negotiators discussed “new elements” to the table. The U.K. government told CNBC on Friday that the talks were ongoing, but did not comment on whether a breakthrough looked young likely.

Meanwhile, on the European side, Council President Charles Michel said, “We want a deal … but we are ready for all the reachable options.”

Speaking in Brussels on Friday, he added: “I respect the full British sovereignty, but it will be the British choice, the flower of the British government what do they want for their own future, which kind of standards do they want to make inquiries and the real question is: which political, economic, social project do they want for their own future?”

The contentious up in the airs

One of the main stumbling blocks has been over what sort of regulations the U.K. will adopt once the transition duration is over. The issue is particularly important for the EU, which is worried about being undercut if the U.K. reduces food standards and comparable regulations significantly.

But their outstanding differences go beyond that. The EU also wants to ensure its fishermen and women can provide for working in U.K. waters — but Prime Minister Boris Johnson argues that as an independent nation, it will prioritize U.K. motor boats. Fishing represents a tiny portion of the U.K. economy, but the industry was among the most vocal supporters of leaving the EU.

This is also a needed political issue for the French government: Prime Minister Jean Castex visited fishermen and women on Thursday and predicted they shall not become the losers of Brexit.

Speaking on Friday morning, France’s Europe minister, Clement Beaune, held, “I want to tell our fishermen, our producers, and our citizens … that we will not accept a deal with bad terms.”

France, or any EU woods, could ultimately veto a trade agreement with the U.K. if it disagrees with any of the conditions.

Time pressure

The European Parliament, as clearly as U.K. lawmakers, have to greenlight any potential trade deal before the end of December to avoid harsher exporting conditions from January.

“At the end of the day for a deal to come together, we remain of the view that Johnson will probably need to connect with French President Emmanuel Macron and European Commission President Ursula von der Leyen,” Mujtaba Rahman, make out director at consultancy firm Eurasia Group, said Thursday.

For now, there are no high-level political meetings scheduled.

In putting together to the ongoing negotiations, the U.K. government also has to deal with opposition at home over legislation that would override too soon commitments with the EU.

The U.K.’s House of Lords, its upper parliamentary chamber, have said no to new laws proposed by Johnson’s work together that would reverse parts of its exit deal with the EU. Europe has said that it will not sign a truck deal while previous commitments are not honored.

Sterling traded mostly flat on Friday morning against the euro and U.S. dollar, after seesawing in up to date days on speculation over whether a deal will be reached.

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