'Difficult' Brexit talks continue with chance of a deal 'receding'

Oscar Williams-Grut
·Senior City Correspondent, Yahoo Finance UK
·3-min read
European Union chief Brexit negotiator Michel Barnier walks to the Conference Centre in London. Photo: Kirsty Wigglesworth/AP
European Union chief Brexit negotiator Michel Barnier walks to the Conference Centre in London. Photo: Kirsty Wigglesworth/AP

Brexit trade talks continue to drag on, with the mood around negotiations souring as time runs out.

A senior Downing Street source on Thursday night told the media the chance of a deal was “receding”, blaming the EU for making “eleventh hour” demands around how to enforce so-called level playing field rules when the Brexit transition period ends on 1 January 2021.

“At the eleventh hour, the EU is bringing new elements into the negotiation,” the unnamed source told journalists, according to the Press Association, BBC and the Times.

“A breakthrough is still possible in the next few days, but that prospect is receding.”

Business secretary Alok Sharma said talks continued but were in a “difficult phase.”

“We are committed to reaching an agreement with the EU on this particular discussion that we are having,” Sharma told BBC Breakfast on Friday.

“But, of course, time is short and we are in a difficult phase. There’s no denying that. There are a number of tricky issues that still have to be resolved.”

READ MORE: UK faces 'serious' border disruption as government under fire over Brexit planning

For months, talks have been held up on the issue of fishing rights, a level playing field for corporate competition, and how to enforce any final deal.

Some progress appears to have been made on the issue of fishing rights, with reports of concessions on both sides in recent days.

However, the progress has been marred by reports that France has threatened to veto any deal if it involves too many concessions from the EU’s side. An unnamed UK government source told the Times the French were “agitating around EU capitals”.

“The Brexit negotiations are likely to remain in focus today with both sides locked in last-minute talks ahead of the year-end deadline to the transition period,” said Jim Reid, a senior macro strategist at Deutsche Bank.

“It’s quite possible that the talks will continue through today into the weekend as the two sides seek agreement on the long-standing issues of fishing, the level playing field, and governance arrangements.”

The stalemate left the pound largely in limbo on Friday morning. Sterling was flat against the euro at €1.107 (GBPUER=X).

The pound was up 0.1% against the dollar to trade close to a 12-month high of $1.3463 (GBPUSD=X). Analysts said this was driven by weakness of the dollar as well as a strengthening sterling.

The pound was trading against the dollar at levels not seen since last December. Photo: Yahoo Finance UK
The pound was trading against the dollar at levels not seen since last December. Photo: Yahoo Finance UK

“The moves are probably two-fold – one is clearly about dollar weakness with majors posting solid gains vs the buck,” said Neil Wilson, chief market analyst at Markets.com.

“The other cause may be markets front-running a Brexit deal with indicators the UK and EU negotiators are heading towards the ‘big push’.”

WATCH: What are the implications of a no-deal Brexit?