The UK and European Union remain apart on “fundamental issues” in post-Brexit trade deal negotiations, Brussels’ top official has warned, ahead of Sunday’s deadline for a decision on the future of the talks.
European Commission president Ursula von der Leyen said gaps remained on fishing rights and the level-playing field measures aimed at preventing the UK undercutting the EU on standards and state subsidies.
But she said the UK would be “free” to decide whether to follow suit each time the EU changes its regulations, though if it refused, the bloc would adapt the conditions for access to its markets.
Her comments came after Prime Minister Boris Johnson warned there is a “strong possibility” the UK will fail to broker a trade agreement and told the nation to prepare for no-deal at the end of the transition period this month.
Speaking at a press conference at the end of a two-day European Council summit in Brussels, Mrs von der Leyen said: “I briefed the leaders on the negotiations with the United Kingdom: positions remain apart on fundamental issues.
“On the level-playing field, we have repeatedly made clear to our UK partners that the principle of fair competition is a pre-condition to privileged access to the EU market.
“It is the largest single market in the world and it is only fair that competitors to our own enterprises face the same conditions on our own market.
“But, this is not to say that we would require the UK to follow us every time we decide to raise our level of ambition, for example in the environmental field.
“They would remain free, sovereign if you wish, to decide what they want to do. We would simply adapt the conditions for access to our market according to the decision of the United Kingdom, and this would apply vice versa.”
On fisheries, Mrs von der Leyen said the UK and EU have “not yet found the solutions to bridge our differences” and urged the Government to “understand the legitimate expectations of EU fishing fleets built on decades, and sometimes centuries, of access”.
“On these and other points, our negotiators are working. We will decide on Sunday whether we have the conditions for an agreement or not.”
And she added: “One way or the other, in less than three weeks it will be new beginnings for old friends.”
Chief negotiators Michel Barnier and Lord Frost are continuing talks in Brussels after Mr Johnson and Mrs von der Leyen agreed at a dinner on Wednesday to resume negotiations.
They said they would make a decision on the future of the talks by the end of the weekend.
But in an interview on Thursday, the Prime Minister said current proposals would keep the nation “kind of locked in the EU’s orbit” and warned there was a “strong possibility” that the UK would fail to strike a deal.
However, he insisted negotiators would “go the extra mile” in trying to get a treaty in time for December 31 – and said he would be willing to return to Brussels, or head to Paris or Berlin, to get a deal over the line.
Mr Johnson told his Cabinet on Thursday to “get on and make those preparations” for a departure on terms like Australia’s, which does not have a trade deal with Europe, unlike Canada.
“I do think we need to be very, very clear, there is now a strong possibility – a strong possibility – that we will have a solution that is much more like an Australian relationship with the EU than a Canadian relationship with the EU,” he said.
But Malcolm Turnbull, who was Australia’s prime minister until 2018, said Mr Johnson should be “careful what you wish for” as Australia’s relationship with the EU is “not one from a trade point of view that I think Britain would want, frankly”.
Culture Secretary Oliver Dowden defended the Government’s description of a no-deal exit as trading on Australian-style terms, insisting ministers were not “taking people for a ride”.
He told BBC Radio 4’s Today programme: “I don’t think it is taking people for a ride to take a major economy that is relatively similar to the United Kingdom and compare the trading relationship.
“I don’t dispute that there will be challenges in relation to having an Australia-style relationship – by the way, it’s worth saying those challenges apply to both sides, that’s why it is so much in the interests of both sides to reach that deal, we are 90% of the way there.
“But we can’t, as Labour appear to be suggesting… accept it at any price.”
The British Retail Consortium has warned that supermarkets and their shoppers would be hit with a £3.1 billion annual “tariff bombshell” without a deal, with 85% of foods imported from the EU expected to face tariffs exceeding 5%.
However, Mr Dowden said most price rises would be 2%, and warned that EU countries would also be affected by a no-deal.
The pound continued to fall on Friday as traders’ fears of a no-deal Brexit intensified.
Against the dollar it hit a three-week low of 1.323 on Friday, down 0.5%. Against the euro it fell to an 11-week low at 1.091, down 0.4%.
Typically the FTSE 100 would rise on a weak pound but it too was down 0.5% within an hour of opening.
Ayush Ansal, chief investment officer at the hedge fund Crimson Black Capital said: “With a no-deal departure from the EU now arguably odds-on, the UK is heading for the worst possible outcome at the worst possible time.
He added: “Some market watchers are even suggesting the pound could fall to parity with the dollar in the event of no-deal, which would be a symbolic coup de grace for sterling.”