Business Today
Loading...

Chances of Brexit trade deal below 50%: Senior British minister

Senior British minister Michael Gove downbeat prediction was in sharp contrast with remarks by the EU's chief negotiator suggesting there had been good progress, as both sides try to prevent a turbulent finale to four years of tortuous discussions

twitter-logoReuters | December 17, 2020 | Updated 22:24 IST
Chances of Brexit trade deal below 50%: Senior British minister
Britain joined the EU in 1973, and formally left on Jan. 31

Senior British minister Michael Gove put the chances of securing a trade deal with the European Union at less than 50% on Thursday, striking a pessimistic tone just two weeks before Britain completes its departure from the world's largest trading bloc.

His downbeat prediction was in sharp contrast with remarks by the EU's chief negotiator suggesting there had been good progress, as both sides try to prevent a turbulent finale to four years of tortuous discussions.

Optimism had been rising that a deal was imminent to keep the goods trade that makes up half of annual EU-UK commerce, worth nearly a trillion dollars in all, free of tariffs and quotas beyond Dec. 31.

But both sides say there are gaps to be bridged and it was unclear whether either would shift far enough to open the way for a breakthrough.

British interior minister Priti Patel said the talks had entered the "tunnel" - EU jargon for the final, secretive make-or-break phase, and EU chief negotiator Michel Barnier tweeted: "Good progress, but last stumbling blocks remain."

But Gove, in charge of implementing an earlier divorce deal, told a parliamentary committee: "I think that regrettably the chances are more likely that we won't secure an agreement."

He put the probability at "less than 50%", adding that, if the British parliament did not have time to pass the deal into law by Dec. 31, "then the clock has run out and no agreement would have been reached and we will be in a world where we will be trading on WTO (World Trade Organization) terms".

Failure to agree a deal on goods trade would send shockwaves through financial markets, damage the economies of Europe, snarl borders and sow disorder along delicate supply chains that stretch across Europe and beyond.

But currency traders appeared to take an upbeat view of the prospects for a deal. Shortly afer Gove spoke, sterling was off its highs but still up around 0.5% at $1.3578 against a weaker dollar.

"TAKING BACK CONTROL"

Prime Minister Boris Johnson, the face of the 2016 Brexit referendum campaign, has long said he will not accept a deal that fails to respect British sovereignty after winning an election last year on a pledge to "take back control".

Gove said some of the remaining differences went "to the very heart of the (government's) mandate".

An EU official who declined to be named said disagreements over fisheries were not yet resolved. Two EU diplomats and an EU official said they did not expect a deal to come together by Friday.

Britain joined the EU in 1973, and formally left on Jan. 31. Since then, it has been in a transition period under which rules on trade, travel and business remain unchanged, with the country remaining within the EU customs union and single market.

European Commission President Ursula von der Leyen has said this week there was now a "very narrow" path to agreement, though success was not guaranteed.

Two main issues - level playing field fair competition guarantees for business activity on both sides, and fisheries - remain unresolved. Both illustrate the vastly different understanding of Brexit in Brussels and London.

What for Johnson is an issue of sovereignty is an existential question for the EU.

Johnson portrays Brexit as a chance to build Britain into a fully independent economy that would be much more agile than its competitors, and so does not want to be tied into the EU's orbit and its rules for years to come.

EU powers fear London wants the best of both worlds - preferential access to lucrative EU markets, with the advantage of setting its own rules. They say this would undermine a project that has sought to bind the nations of Europe, ruined by World War Two, into a global trading power.

Also Read: Stocks ease on stalled US stimulus talks, last-ditch Brexit negotiations

Also Read: No-deal Brexit would set a bad example: Angela Merkel

  • Print
  • COMMENT
BT-Story-Page-B.gif
A    A   A
close