LDN - Business

Brexit negotiators to talk in bid to break deadlock over trade

[October 20, 2020] By Guy Faulconbridge and Gabriela Baczynska

LONDON/BRUSSELS (Reuters) - Brexit negotiators from the European Union and Britain will speak on Tuesday in an attempt to break the deadlock over a trade deal, after both sides demanded concessions to prevent a disruptive finale to the five-year Brexit drama.

A tumultuous "no-deal" exit when Britain leaves a standstill transition period on Dec. 31 would sow chaos through supply chains and undermine Europe's economy just as the coronavirus pushes whole sectors to the edge of insolvency.

After an EU demand for concessions, Prime Minister Boris Johnson broke off talks and said it was time to prepare for a no-deal Brexit: the nightmare scenario for business.

EU chief negotiator Michel Barnier offered on Monday to intensify talks and open discussions on legal texts of a draft deal, though Britain said there was still no basis to resume discussions unless there was a fundamental change in approach.

Barnier and Britain's chief Brexit negotiator, David Frost, were due to speak by telephone at 1300 GMT.

"The European Union remains absolutely committed to reaching a deal, our door is open and will remains open until the very last moment... but time is short," said EU Financial Services Commissioner Mairead McGuinness.

EU diplomats cast Britain's moves as bluster and a frantic bid to secure concessions before a last-minute deal.

"If they want to get back to the negotiating table, they can," said one EU diplomat. "If they want to jump – we won't be able to stop them."

'POSTURING'

"They got what they wanted – intensified talks, on legal texts, on multiple areas ... Now, they are just faffing around," said another EU diplomat.

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Puzzle with printed EU and UK flags is seen in this illustration taken November 13, 2019. REUTERS/Dado Ruvic/Illustration

"All this posturing is only aimed at strengthening Johnson's hand. If they don't want to talk, that's their choice. There is no point at this stage to give them anything more."

There is concern in some European capitals that Johnson may judge that the domestic political benefits and potentially the long-term economic freedom of a noisy no-deal exit outweigh the benefits of a shallow trade deal.

Britain formally left the EU at the end of January, but the two sides have been haggling over a deal that would govern $900 billion in trade including everything from car parts to medicines.

While the EU was clear that it was awaiting Britain's response, Britain was clear it wanted the EU to budge.

"The EU still needs to make a fundamental change in approach to the talks and make clear it has done so," Britain's chief negotiator David Frost said on Monday.

But EU diplomats said they had already moved towards Britain.

"If Britain wants to keep on talking, they have enough material from our side to argue at home that time is ripe," said the first EU diplomat. "They have all the input from our side they need."

Johnson and his Brexit supremo Michael Gove will tell businesses on a video call on Tuesday to step up preparations for the end of the transition period.

U.S. investment banks say the most likely outcome is a deal, though the consensus was wrong on the 2016 Brexit referendum when Britons voted by 52-48% to leave, shocking markets and European leaders.

(Reporting by Guy Faulconbridge; Editing by Andrew Cawthorne and Alex Richardson)

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