The Union Jack and the European Union flag. Picture: REUTERS/JON NAZCA
The Union Jack and the European Union flag. Picture: REUTERS/JON NAZCA

London/Brussels — Brexit hung in the balance on Monday as Britain and the EU made a last-ditch attempt to bridge significant differences to strike a trade deal that would avoid a disorderly exit in just 24 days.

As fears rose of a chaotic no-trade deal Brexit on December 31 when the UK finally leaves the EU’s orbit, talks will resume in Brussels before Prime Minister Boris Johnson and European Commission President Ursula von der Leyen review the situation in the evening.

Irish Prime Minister Micheál Martin said on Sunday the odds of a deal are just 50-50 while investment bank JPMorgan said odds of a no-trade deal exit rose to one third from 20%.

“Decisive hours for the future of EU-UK relations,” said Sebastian Fischer, an EU spokesperson for Germany, the current holder of the EU presidency.

Failure to secure a deal would snarl borders, spook financial markets and disrupt the delicate supply chains that stretch across Europe and beyond just as the world tries to cope with the vast economic cost of the Covid-19 pandemic.

Sterling was a touch lower vs the dollar, easing off the 2½-year highs of $1.3540 hit on Friday, though overnight and one-week implied volatility rose to an eight-month high.

No agreement

For weeks, the two sides have been haggling — as yet without a result — over fishing rights in British waters, ensuring fair competition for companies and ways to solve future disputes.

EU chief negotiator Michel Barnier told national envoys to Brussels on Monday morning that there was no agreement yet in UK trade talks, a senior diplomat told Reuters.

Updating the EU envoys from 8.30am, Barnier said the three most contentious issues in the negotiations have not yet been resolved, according to the diplomat, who was taking part in the closed-door briefing.

“I still think it is more likely than not that we will find a way of getting a deal done but I won’t be shocked if it falls apart,” Irish foreign minister Simon Coveney was quoted as saying by the Irish Times.

“If we don’t get a deal in the next few days … there are serious problems around ratification and timelines.”

In a move that could further undermine the talks, the British government will press ahead with draft laws this week that would breach London's earlier divorce treaty with the bloc.

Junior foreign office minister James Cleverly said on Monday the clauses that breach the treaty will be reinserted.

Reuters

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