Time is running out for Brexit trade deal, EU and Britain say

Britain and the European Union cautioned each other on Monday that time was running out to reach a Brexit trade deal, with big differences still to be bridged on state aid, enforcement and fishing.

The United Kingdom leaves the EU's orbit on Dec. 31, when a transition period of informal membership ends following its formal departure last January, and the sides are trying to secure a deal to govern nearly $1 trillion in annual trade.

Prime Minister Boris Johnson, who is also tackling Europe's worst official death toll from COVID-19, says a deal would be preferable but that Britain, which joined the EU in 1973, would flourish without one.

Talks in London over the weekend were "quite difficult" and "massive divergences" remain on the most thorny elements of fisheries, economic fair play and settling disputes, an EU source said.

Johnson's spokesperson said there had been some progress but "there still remains divergence on issues (such as) fisheries and the level playing field."

"We want to try and reach a free trade agreement as soon as possible but we've been clear we won't change our negotiating position," the spokesperson said.

Stuck on state aid, fisheries, future disputes

After breaking multiple deadlines, the negotiators are stuck mainly on fishing, state aid and how to resolve any future disputes.

A trade deal would not only safeguard trade but also buttress peace in British-ruled Northern Ireland, though some disruption is almost certain at the busiest EU-U.K. border points.

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.

British Foreign Secretary Dominic Raab said it was a significant week for Brexit. Talks between EU chief negotiator Michel Barnier and British chief negotiator David Frost continued on Monday.

Asked whether there was reason for optimism, Barnier told reporters: "There are reasons for determination."

"We are running out of time here," said Irish Foreign Minister Simon Coveney, whose country is in the EU. "The truth of Brexit is now being exposed in terms of the challenges of it."

Coveney said a deal could be done if there was give and take on both sides, but told Ireland's Newstalk Radio that a failure to agree on fishing rights could wreck a deal.

"If there isn't an agreement on this, the whole thing could fall on the back of it and that's the worry," he said.

Fishing alone contributed just 0.03 per cent of British economic output in 2019, but it is an emotive subject as many Brexit supporters see it as a symbol of the regained sovereignty they hope leaving the EU will bring. Combined with fish and shellfish processing, the sector makes up 0.1 per cent of U.K. GDP.