No-deal Brexit worry as talks deadlock on key issues

A SENIOR British minister said yesterday that there was still a chance of a turbulent Brexit without a trade deal as talks with the EU had snagged on fishing, governance rules and dispute resolution.

Just 30 days before Britain leaves the EU's orbit following a standstill transition period since it formally quit the bloc, the sides are trying to agree on a trade deal to avoid a rupture that could snarl almost $1 trillion (R15.2 trillion) in annual trade.

With each side urging the other to compromise, a French official said Britain must clarify its positions and “really negotiate”.

Michael Gove, Chancellor of the Duchy of Lancaster, the cabinet minister who oversees the Brexit talks for London, said a deal was close but that to get it over the line the EU would have to live up to its responsibilities.

Asked if a “no deal” scenario was closer than anyone would admit, he told ITV: “It's certainly the case that there is a chance that we may not get a negotiated outcome.

“That's why it's important business prepares for all eventualities, but I very much want a deal and I believe that we can secure one,” Gove said.

He avoided repeating an earlier prediction of a 66% probability of a deal, declining to give a figure. The pound rose above $1.34 for the first time in three months, indicating investors remained optimistic that a Brexit deal would be clinched.

While most major investment banks say a deal is their central prediction, some investors have pointed out that Wall Street and the City of London were poorly prepared for the 2016 referendum as few believed the UK would vote out.

Failure to secure a deal would snarl borders, spook financial markets and disrupt delicate supply chains that stretch across Europe and beyond – just as the world grapples with the vast economic cost of the Covid-19 outbreak.

Prime Minister Boris Johnson, who is under pressure from opponents within his party who dislike the stringent Covid19 lockdowns, says a deal is preferable but that the UK could prosper without one. Both sides have contingency plans for a no-deal exit.

Even if a trade accord is secured, it is likely to be just a narrow deal on goods, and some disruption is certain as border controls are erected between Britain and the world's biggest trading bloc.

Britain's Office for Budget Responsibility said last week that failure to agree a free trade deal would wipe an extra 2% off UK economic output while driving up inflation, unemployment and public borrowing.