Germany warned of the serious economic damage that would stem from a no-deal outcome to the EU-UK trade talks as it called for rapid progress in the limited window of time left to negotiators.
Michael Roth, Minister of State for Europe, cautioned on Tuesday that there had been no real progress of substance during the latest talks with the UK, and that time was at risk of “running away from us”.
“We will see in the next few days whether a positive outcome can be achieved or whether we have to intensify our preparations for a scenario without an agreement,” he said in a press conference following discussions among European affairs ministers in Luxembourg.
“No one should play down the risks of a no-deal. This would be very bad news for everyone — for the EU and even more so for the United Kingdom in the midst of the most serious economic downturn for decades,” he said.
Boris Johnson, the UK prime minister, is due to hold a call with European Commission president Ursula von der Leyen on Wednesday as EU leaders prepare for a summit later this week that will discuss Brexit. Officials on both sides think the talks will turn on the ability of negotiators to strike a bargain on a trio of major sticking points: fishing rights, level playing field arrangements, and governance of the future relationship.
Mr Roth argued it was for the UK to make decisive steps in those three areas, as he warned its economy would be hardest-hit by a failure to strike a trade deal. However, he also warned that there would be repercussions for EU member states reeling from the Covid-19 fallout.
Among the countries most anxious to avoid the economic damage of a no-deal scenario are Ireland, Belgium, and the Netherlands because of their close trade links to Britain.
France’s politically-sensitive fishing industry would be particularly affected by a no-deal scenario given its activities in UK waters, and fishing rights remain one of the most difficult sticking points in the current discussions.
Michel Barnier, the EU’s Brexit negotiator, briefed ministers in Luxembourg on the latest talks on Tuesday as he argued for continued negotiations.
At the meeting he stressed the UK would derive much larger economic benefits from continued participation in EU markets such electricity, than the EU would receive from a fishing deal. The EU fishing sector employs fewer than 180,000 people and accounts for less than 1 per cent of the bloc’s economic output.
Mr Johnson has previously suggested that a deal is needed by October 15, but this now looks improbable. Some officials instead are looking at an early-November deadline as being more realistic. EU leaders will take stock of the latest developments at the Brussels summit on Thursday and Friday.
On the UK side, a government official on Tuesday accused the EU of “running down the clock” rather than rushing to settle a deal, and urged Brussels to increase the pace and “inject some creativity”.
Despite the rhetoric on both sides, there have been signs of progress in some areas. The UK appears more open to move on state subsidies and UK chief negotiator David Frost last week said Britain was willing to discuss commitments on state aid policy that would “go further than you normally do in a free trade agreement”.