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No-trade deal Brexit is still possible, UK minister says

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 - in addition to the 4% drop from leaving the bloc with a deal - while driving up inflation, unemployment and public borrowing. Talks have snagged on fishing in Britain's rich waters, on what EU trading rules London will accept, and on how any dispute might be resolved.

Reuters | Updated: 01-12-2020 16:11 IST | Created: 01-12-2020 16:07 IST
No-trade deal Brexit is still possible, UK minister says
Representative image Image Credit: ANI

A senior British minister said on Tuesday there was still a chance of a turbulent Brexit without a trade deal as talks with the European Union 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 a trade deal to avoid a rupture that could snarl almost $1 trillion in annual trade.

With each side urging the other to compromise, a French official said Britain must clarify its positions and "really negotiate", and cautioned that the EU would not accept a "substandard deal". 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.

Gove 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 on Tuesday, indicating investors remained optimistic that a Brexit deal will 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 United Kingdom 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.

"IN THE END-GAME" Prime Minister Boris Johnson, who is under pressure from opponents within his party who dislike the stringent COVID lockdowns, says a deal is preferable but that the United Kingdom 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 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 - in addition to the 4% drop from leaving the bloc with a deal - while driving up inflation, unemployment and public borrowing.

Talks have snagged on fishing in Britain's rich waters, on what EU trading rules London will accept, and on how any dispute might be resolved. "The EU still wants to take the lion's share of the fishing in our waters - which is just not fair given that we are leaving the EU," Gove told Sky.

A trade deal would not only safeguard trade but also buttress peace in British-ruled Northern Ireland. German Chancellor Angela Merkel, Europe's most powerful national leader, has said some of the EU's 27 member states are getting impatient.

Irish Prime Minister Micheal Martin said a deal could be done this week. "There is a landing zone for an agreement," Martin told the Irish Times. "We are now really in the end-game if a deal is to be arrived at this week."

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)


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