Despite months of talks a post-Brexit trade deal still has not been agreed.
Boris Johnson and Ursula von der Leyen, the European Commission president, agreed both sides would reopen the troubled negotiations on Sunday, after they were “paused” on Friday.
But following a late night and intense discussions over the remaining differences – fishing quotas, fair competition rules and how to resolve disputes – there is still deadlock, with France threatening to veto a deal. And Wednesday now looks to be the deadline for talks to conclude.
What happens now?
Legally, the transition period, during which the UK effectively remains part of the EU customs union and single market, ends on December 31.
The prime minister has ruled out seeking any extension.
It then logically follows that, if no last-minute deal is struck in the coming hours, Britain will leave the EU without any future relationship in place and will fall onto default World Trade Organisation rules.
What does that mean for the economy?
A no-deal outcome means from January 1 there will be significant tariffs in place on goods and agricultural products, which could in turn jeopardise jobs and industry.
The Office for Budget Responsibility (OBR) warned earlier this month that no-deal would leave the UK worse by 1.75% in terms of GDP (gross domestic product) next year and unemployment could reach 8%.
To put it in context, Bank of England governor Andrew Bailey has said that no-deal would be a greater long-term hit to the economy than the coronavirus pandemic.
In the days before December 31, the government is expected to do all it can to prepare businesses.
What about the borders and importing goods?
The UK would have a hard border with the EU, where before there was free flow of goods, services and people.
A leaked Whitehall document, known as the Yellowhammer report, predicted a three-month “meltdown” as rules and regulations governing imports, exports and customs would effectively be ripped up overnight under no-deal.
Officials forecast lines of 7,000 trucks at Dover and two-day waits to get into France.
This could also mean delays to food supplies, goods and potentially medicine.
A report on Sunday suggested supplies of the Covid-19 vaccine would be flown into the UK by military aircraft.
And environment secretary George Eustice admitted at the weekend that there could be “some impact” to food prices for consumers.
In terms of financial services, the UK is likely to still be able to access EU services on the basis both markets are equivalent. This is something the Commission decides unilaterally.
The free flow of data is largely expected to continue after the UK put the EU’s General Data Protection Regulation (GDPR) rules into law last year.
What about Northern Ireland?
The withdrawal agreement negotiated by Boris Johnson protected Northern Ireland’s soft border with the EU, with the region expected to continue to follow some of the bloc’s rules.
But the government’s controversial Internal Markets Bill and the Finance Bill both override that deal by tying the region to the rest of the UK’s rules.
The EU has said the legislation breaches international law and has begun legal proceedings.
Eustice confirmed on Sunday the government intends to press ahead if no deal is struck.
Will this be how it is forever?
Both sides agree that a trade deal is preferable to no deal.
It is highly unlikely that, even if Britain crashes out of the bloc later this month, talks for a future agreement would not reopen in future, given the two markets’ close proximity and shared interests.
How much damage is caused to international relations and both the UK and EU economies in the meantime remains to be seen.
How much time is left for a deal?
The UK and EU have until Wednesday to reach a deal, Michel Barnier told MEPs on Monday.
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.
Any agreement has to be ratified by both the UK parliament and the European parliament as well as signed off by the EU leaders. Time is running out.
There had been hopes that could happen at a two-day summit in Brussels starting on Thursday — the final scheduled gathering of the year.
If a deal is reached this week, the MPs could be expected to vote on it next week or possible the week after.