Brexit talks in final stage as fears grow over impact of a no-deal

A NO-TRADE deal Brexit will wipe about two per cent off the economy next year and cause a long-term decline in GDP, the Office for Budget Responsibility (OBR) warned yesterday.

Unless a deal with the EU is struck before the end-of-year deadline, the UK will trade on less lucrative World Trade Organisation terms with its largest trading partner from Jan 1.

That economic damage would be compounded by temporary disruption to trade, such as long queues at borders, which would contribute to GDP being 1.5 per cent lower after five years, the OBR said.

GDP is already predicted to plummet by 11.3 per cent in 2020 because of the coronavirus pandemic.

Michael Gove yesterday warned that “not everything will be all right on the night” after the Brexit transition period ends, even if there is a trade deal.

The Chancellor of the Duchy of Lancaster urged businesses not to send their goods into Europe through Kent unless they complied with EU rules or risk “furring up that vital artery”.

Mr Gove said there would be two or three weeks of disruption, which would “settle to a new normal”.

Ursula von der Leyen said in a Brussels speech there had been “genuine progress” in trade talks but warned they could still end in no deal. The UK and EU had the outlines of final agreements on goods and services, transport, law enforcement and judicial co-operation in their grasp, the European Commis

sion president said. But there were still major obstacles to overcome on fishing rights, the level playing field guarantees and the deal’s enforcement, she added.

UK-EU trade negotiations have been held online since Michel Barnier was forced into quarantine after a member of his team tested positive last week.

He is expected in London to resume face-to-face talks at the end of the week, if he tests negative for the virus.

Mr Barnier told David Frost, the UK’S chief negotiator, on Tuesday that there was no point in his travelling unless there was progress on the three issues.

Mrs von der Leyen urged EU leaders to be prepared to compromise and back the Brexit trade agreement at their Brussels summit on Dec 10 if the breakthroughs could be found.

“These are decisive days for negotiations with the United Kingdom. But, frankly, I cannot tell you today if in the end, there will be a deal,” she told MEPS, who must then ratify the deal.

She said that Brussels needed enforceable guarantees of fair competition in areas such as subsidy law, tax, environment and labour laws. She called for a long-term predictable fishing agreement and a robust enforcement system for the deal.

France’s foreign minister accused Britain of “dragging its feet” on fishing and the level playing field guarantees. Jean-yves Le Drian said: “You have to play to the same rules and respect the rules. Otherwise it’s another sport. You can’t play cricket on a football pitch.

“Sometimes it’s better to have no deal than a bad deal,” he added.

Micheál Martin, Ireland’s prime minister, told Euronews that the EU could facilitate a “staged ratification” to beat the deadline, provided a deal was agreed.