FX.co ★ UK in limbo as Brexit talks miss deadline

On Sunday, December 20, London and Brussels failed to nail down a post-Brexit trade deal, thus having missed the deadline.

Nevertheless, the talks proceeded on Monday, December 21. According to Bloomberg, fisheries remain a major stumbling block to the agreement. The UK and the EU cannot reach a compromise on the access of EU fishing boats to British waters. Another thorny issue is fair competition rules. The sides are wrangling over restrictions on government aid to businesses. In case the sticking points are not settled by January 1, 2021, the UK and the EU will have to leave the European single market and customs union and hence to trade under the rules of the World Trade Organization (WTO). Undoubtedly, this is the most unfavorable scenario as lots of companies will be forced to quit business.

Earlier, the European Parliament appealed to the Brexit negotiators to finalize a deal, so that EU deputies could manage the vote until the end of 2020. However, analysts share the viewpoint that such a scenario will be hardly implemented. Even if there is a breakthrough and an agreement is reached, there is a slim chance it will come in force from January 1, 2021, experts at Bloomberg warn.

In early December, UK Prime Minister Boris Johnson claimed that the Britons should be ready for the exit from the EU without a deal. He acknowledged that the likelihood of a compromise on trade questions between the UK and the EU is close to zero as Brussels is unwilling to soften its stance.

Chief Brexit negotiator Michel Barnier said that he and his British counterpart David Frost are forging ahead with the talks to come to mutually beneficial terms. Michel Barnier pointed out that the EU also strives to reach a compromise but some hurdles should be cleared first. Experts caution that fisheries still remain a significant obstacle.

Last week from December 14 until 18, the European Parliament deputies said they were ready to assemble for an emergency meeting if the trade deal between London and Brussels is finalized until December 20. To sum up, both the UK and EU authorities are striving for the big goal to sign an accord which is to set out further trade relations. Without a deal, trade relations will be subject to the WTO rules. In other words, tariffs will be imposed on most goods.