French president Emmanuel Macron put the situation bluntly on Friday: Britain still needs a post-Brexit trade deal more than the EU does.
Speaking after UK prime minister Boris Johnson excoriated the state of the Brexit talks and told Britain’s businesses to prepare for a hard exit from the EU single market in 11 weeks’ time, Mr Macron insisted the EU retained the upper hand.
“The British, no matter what was said to them during the referendum campaign, need the European single market,” he said after an EU summit in Brussels on Friday. “They are much more dependent on us than we are on them.”
That calculation underpinned a decision in Brussels to prepare for further talks in London despite Mr Johnson’s insistence that only a “fundamental” rethink of the EU’s demands could unblock negotiations. “There is no point in trade talks if the EU doesn’t change their negotiating position,” said a UK spokesperson.
Britain’s threat to abandon the discussions was widely seen in Brussels as a high stakes negotiating ploy.
Mr Macron said that Michel Barnier, the EU’s chief negotiator, has been authorised to “continue talks for the coming two weeks”, while Ursula von der Leyen, the commission president, wrote on Twitter that, “as planned”, officials would head to London next week “to intensify these negotiations”. Downing Street later responded by insisting the EU summit’s outcome meant there was no basis for further discussions starting on Monday.
EU officials also noted the real stakes for Britain in walking away. Leaving the talks and pursuing what the UK calls “Australian-style” terms would mean EU import tariffs on UK goods, notably on agricultural produce, and a loss of access rights for services providers from lawyers to truck drivers.
The message was echoed by British business groups, which warned that many companies were not prepared for the disruption, red tape and expense of having to trade with EU counterparts next year.
Carolyn Fairbairn, CBI director-general, said that “this was no time to give up”. She added: “A deal is the only outcome that protects Covid-hit livelihoods at a time when every job in every country counts.”
British carmakers would face new tariffs while Michael Gove, Cabinet Office minister, has admitted that leaving the EU without a deal would have a “significant and damaging” effect on farmers, who would face tariffs of at least 40 per cent on sheep meat and beef.
In his short televised statement, Mr Johnson focused his ire on the EU summit, which was held on the date he had identified as the deadline for a deal. Officials in London seized on a decision by EU leaders on Thursday to delete a pledge to intensify talks from its concluding statement. (EU diplomats said the change was made to avoid making it look like pressure was being placed on Mr Barnier.)
A senior UK official with knowledge of the talks said the mood on the British side was “very gloomy” and that the EU leaders’ summit conclusions demanding that London make the first move in search of a deal had landed like a “cup of cold sick”.
Mark Rutte, the Dutch prime minister, admitted after the summit there had been a “misunderstanding” about the wording of the conclusions, leaving Britain with the false impression that the EU was asking it to make all the concessions. “On our side we also think we should speed up, together,” Mr Rutte said.
That message was shared by other EU leaders, including Angela Merkel, who insisted a deal is still there to be done if both sides compromise. “We have seen some light in the last few days of negotiations, but also shadow,” the German chancellor said on Friday.
The question now is how to overcome the deadlock. The three key sticking points are the vexed questions of EU fishing rights in UK waters, “level playing field” conditions to prevent unfair competition between British and EU companies, and dispute-settlement arrangements for the deal.
While there has been intense focus in recent days on the stand-off over fisheries, Ms Merkel and Mr Macron stressed that the question of fair competition — notably in the area of state aid — is crucial, with the French president saying it is the “principal problem, the number one”.
Even as leaders called on the UK to cede ground on that issue, the bloc gave its clearest indication yet that it is ready to explore creative compromises on the highly sensitive issue of fishing.
Mr Macron acknowledged that life will indeed have to change for France’s fishing fleet. “Will the situation be the same as today? No, for sure, our fishermen know it, we know and we will be at their side,” he said. “Can we accept a Brexit that sacrifices our fishermen? No, equally not.”
France’s leader said he knew that access “will not be of the same nature, it will not be as ambitious as now”.
“It will be doubtless be with conditions, perhaps with a fee. But it must be long-term because we must give each other visibility,” he said.
Many Conservative MPs still believe Mr Johnson will strike a “five minutes to midnight” deal with the EU and the pressure on him to compromise with Brussels from business leaders and farmers will be intense as the clock ticks down to the end of the Brexit transition period on December 31.
Brussels believes that talks could continue until early to mid-November if needed even though it will dramatically squeeze the timetable for ratification.
Peter Mandelson, former EU trade commissioner, said: “There is now too little separating the two sides for either to afford a no-deal outcome. Of course Downing Street will inflate their language to put pressure on the EU. But my judgment is that Johnson is too weak politically to have the commotion of no-deal coming on top of the Covid mayhem.”
Additional reporting from Mehreen Khan, Guy Chazan, Dan Thomas, Michael Pooler and Peter Foster