The UK and Europe are set to resume trade talks later this week, just days after calling off negotiations due to lack of progress.
A spokesperson for Downing Street on Wednesday confirmed that negotiations over a post-Brexit trade deal would resume in the coming days.
“We are ready to welcome the EU team to London to resume negotiations later this week,” the spokesperson said. “We have jointly agreed a set of principles for handling this intensified phase of talks.”
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The resumption follows a public overture from Michel Barnier, the European Union’s chief Brexit negotiator.
Barnier told the European parliament on Wednesday that a deal was “within reach” despite the recent breakdown of official talks between the EU and UK.
“Despite the difficulties we’ve faced, an agreement is within reach if both sides are willing to work constructively, if they are willing to compromise,” he said.
“We will seek the necessary compromises on both sides in order to do our utmost to reach an agreement and we will do so right up until the last day which it’s possible to do so, our doors will always remain open right up until the very end.”
Lord David Frost, the UK’s chief Brexit negotiator, held a phone call with Barnier after the statements, where the two agreed to resume formal negotiations.
While negotiations will now resume, the Downing Street spokesperson said that “significant gaps remain between our positions in the most difficult areas” and “It is entirely possible that negotiations will not succeed.”
“If so, the UK will end the transition period on Australia terms and will prosper in doing so,” the spokesperson said.
Barnier said it “takes two to make a deal” and said the EU would be ready for “the consequences of a possible no-deal scenario.”
The pound rallied strongly against both the euro and dollar in the wake of Barnier’s comments. Sterling was up 1.3% against the euro to €1.1088 (GBPEUR=X) shortly after the confirmation of negotiations. The pound was up 1.7% against the dollar to $1.3163 (GBPUSD=X), marking a six-week high.
“We believe now is the time to buy into the potential for a last-minute deal before mid-November and with it we expect a higher GBP in the short term at least,” Jordan Rochester, a foreign exchange strategist at Nomura, wrote in an investment note sent to clients on Wednesday.
Last week the UK told the EU not to send its negotiating team to London after the lapsing of prime minister Boris Johnson’s 15 October deal deadline. Johnson said negotiations were effectively ended due to the EU’s failure to compromise. Since then, both sides have said they would be willing to re-engage if the other side compromised.
EU leaders will next meet informally in Berlin on 16 November. This is seen as the final deadline for approval of any potential trade deal with Britain. The UK leaves the Brexit transition period on 1 January 2021.
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