The UK and EU have until Wednesday to reach a post-Brexit free trade deal or face negotiations collapsing without agreement, Michel Barnier has told MEPs.
That date is seen as the “latest conceivable moment” to conclude a deal before EU leaders meet for a European Council summit on Thursday, a Brussels source told HuffPost UK.
Barnier, the EU’s chief negotiator, was neither pessimistic or optimistic about the chances of a deal when he briefed MEPs on the European Parliament’s Brexit coordination group.
He confirmed that no deal had yet been reached on fish and was clear big differences remain and that time is becoming very tight, the source said.
It came ahead of a key call between Boris Johnson and European Commission president Ursula Von Der Leyen at 4pm on Monday, which could make or break Brexit talks.
Failure to reach agreement on a future trade and security relationship would see the UK crashing out of the standstill transition period into World Trade Organisation terms for trade with the EU from January 1.
The Office for Budget Responsibility (OBR) has estimated that leaving with a deal would cause a 4% long-term hit to the UK’s economic output.
Failing to reach a deal and defaulting to WTO terms would add a 2% impact to this, meaning a long-run hit to economic output of up to 6%.
Downing Street has said it is prepared to negotiate for “as long as we have time available” – with fishing access and quotas, and the extent to which the UK and EU follow common standards, thought to be the key sticking points.
The prime minister’s official spokesperson said: “Time is obviously in very short supply and we’re in the final stages, but we’re prepared to negotiate for as long as we have time available if we think an agreement is still possible.”
The spokesperson also ruled out negotiations continuing into the new year if talks fail before December 31.
Asked if a series of mini-deals could be brokered on the areas already agreed between the two sides, the spokesperson said: “I think we’ve been clear that if we can’t reach an FTA we will leave on Australian terms.”
He also said: “Australia terms would mean the UK trades with the EU under WTO terms based on the principles of free trade.”
Barnier also reportedly told MEPs that member states would not approve a deal if Johnson presses ahead with law-breaking legislation that would give ministers the power to breach the withdrawal agreement that took the UK out of the EU in January.
The Lords had voted to remove the offending clauses from the Internal Market Bill that relate to trade between Northern Ireland and the UK mainland. But the prime minister is on Monday due to reinsert them before the Commons votes on the bill.
Michael Gove travelled to Brussels on Monday morning for last-minute talks with Maros Sefcovic, his opposite number on the joint committee on implementing the withdrawal agreement.
Any agreement they reach on Northern Ireland may resolve the issue and remove the need for the law-breaking clauses that No.10 sees as a “legal safety net”.
The PM’s spokesperson said the government would be “publishing a statement later” on Monday on the UK’s approach to the law-breaking clauses.