Both sides need to reach new trade arrangements and rectify them in their respective parliaments before the end of the year. Failure to achieve that could lead to a no-deal scenario — higher costs and barriers for exporters on both sides. According to Raab, a breakthrough depends on overcoming differences over a “fairly narrow” number of issues. The major sticking points remain over fishing, competition policy and governance of any future deal. They have different views on how much access European fishing crews should have on U.K. waters, and on what sort of market competition rules should be applied to ensure Britain’s departure does not jeopardize the EU’s single market.
Speaking on Monday morning, Irish Foreign Minister Simon Coveney said that fishing is a more difficult issue than competition rules. Without an agreement on fishing, “the whole thing could fall on the back of it,” he said, stressing the importance of this subject to the entire negotiating process.
Earlier last week, European Commission President Ursula von der Leyen said that “these are decisive days” in the process, but she could not say whether there would definitely be a deal. The message in London since then has been more positive.
David Frost, the U.K.’s chief negotiator, said Friday that “it is late, but a deal is still possible.” A European official, who didn’t want to be named due to the sensitive nature of the talks, told CNBC over the weekend that a breakthrough is dependent on a phone call between U.K. Prime Minister Boris Johnson and von der Leyen.
However, there aren’t yet any plans for a call between the two. In the meantime, businesses on both sides wait for an end to the process. The British Chambers of Commerce, a trade body for businesses, warned in late September of “major gaps” in government guidance for firms if no deal is reached. As a member of the EU for more than 40 years, many U.K. exporters rely on raw materials or clients based in Europe and vice-versa.