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The chances of Britain leaving the European Union without a trade deal have risen dramatically, as negotiations have been threatened by London’s insistence that it has full autonomy over its state aid plans.
This is according to today’s negotiators and diplomats.
The UK left the EU on January 31, turning its back on it after 47 years in the post-World War II project that sought to turn Europe’s ruined nations into a global power.
Britain’s exit followed more than three years of disputes over an exit deal since the 2016 referendum that sent shock waves through global financial markets.
Since Brexit, talks on a new trade deal have so far made little progress.
But fears are mounting in London, Brussels and other European capitals that a British exit without a trade deal could sow even more economic chaos amid the turmoil from the coronavirus crisis that has hit European economies.
“The chances of a deal, or a no deal, are 50/50,” said a senior EU diplomat.
“There has been absolutely no movement from the British side in the talks. If this approach does not change quickly, we will not be able to negotiate a deal in time,” the diplomat said.
If no trade deal is reached, financial markets could hit financial markets as nearly $ 1 trillion in trade – from auto parts and medicine to lamb and fish – would be thrown into turmoil.
A British source close to the negotiations said the European Union was slowing down the negotiations and should understand that its demands for state aid and fisheries were not compatible with Britain’s status as an independent country.
“We have also constantly tried to move the discussions forward, but an EU has prevented us from doing so, which insists that everything must go hand in hand with the most difficult issue,” the source said.
“Their request that we accept the continuation of state aid and EU fisheries policy is simply not compatible with our status as a fully independent country,” the source said.
Prime Minister Boris Johnson’s office said the goal was to reach an agreement, but the EU needed to show more realism. For their part, EU officials seek clarity.
“Sooner or later the UK should clarify what it wants. It is not possible to leave the European club and at the same time keep all the benefits,” European Council President Charles Michel told reporters.
“We are not sure that we will reach an agreement. I hope it is possible, but not at all costs,” said the President of the European Council.
The current stumbling block is state aid.
The bloc’s Brexit negotiator, Michel Barnier, went to London on Tuesday to tell his British counterpart David Frost that the UK must move forward on state aid or there will be no deal, according to EU diplomats.
Subsequently, Michel Barnier said that London had not shown enough flexibility and creativity in fair competition, fishing and dispute resolution to seal a deal on new business ties on a “strict deadline” of late October.
“The Commission now fears that the next round of negotiations will end with nothing,” the diplomat said. “If the UK doesn’t move a bit when it comes to state aid, we have a problem.”
Britain does not want to allow Brussels to have authority over its state aid rules, stoking one of the bloc’s biggest fears: that it will one day face stiff competition from an economy outside its borders.
“The EU must realize that what they are asking is at odds with what the British people voted, twice, and is not something we can accept,” the British source said.
Senior officials in the office of British Prime Minister Boris Johnson see only a 30% -40% chance of a Brexit trade deal due to the deadlock, the Times reported today.
“There is a risk of a no-deal scenario at the end of the year,” said an EU official. “People need to be prepared for that.”
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