High-level Brexit trade talks have been scuppered by the coronavirus, with negotiations paused after a confirmed case within the EU’s negotiating team.
EU chief negotiator Michel Barnier confirmed he had halted talks “for a short period” with the UK’s top negotiator David Frost after one of his team fell ill with the coronavirus. ““The teams will continue their work in full respect of guidelines,” he added.
A UK government spokesperson said discussions were ongoing between the two sides over “the implications for the negotiations.”
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It came after the pound dipped on Thursday on reports European leaders are demanding the EU ramps up its no-deal Brexit planning for the end of the year.
Frustrations are said to be growing within several EU national governments that the European Commission has not yet published its contingency plans for a no-deal Brexit.
“It is high time to prepare people and businesses in case we cannot fix an agreement in time,” said one senior EU diplomat quoted by the Times.
Negotiations have gone down to the wire between Brussels and the EU over a trade deal once Britain’s transition period expires at the end of the year.
The UK left the bloc at the start of 2020 but temporarily retains full market access and other rights.
Firms and economists including government forecasters expect severe short-term disruption and long-term economic damage if no deal is struck, which could mean the abrupt imposition of tariffs, quotas and other administrative burdens.
The pressure for greater no-deal planning appears to have added to investors’ concerns about the chances of an agreement being reached, with sterling slipping slightly on Thursday morning.
The pound has made gains since early November on rising hopes of an agreement. But it was trading 0.4% lower against the dollar (GBPUSD=X) at just over $1.32 at around 9am in the UK on Thursday. It was only down around just over 0.1% against the euro (GBPEUR=X) at just under Є1.12, however, while the COVID-19 hit to talks did not put downward pressure on sterling later in the day.
On the EU side, there are said to be particular worries in France, Belgium, and the Netherlands among others about the economic cost of disruption unless the EU seeks to alleviate the impact.
The Times reports Barnier has resisted publishing contingency plans so far to boost the bloc’s hand in trade talks.
But the diplomat added: “We must now come up with contingency measures. 1 January 2021 is getting close; we need a safety net.”
EU leaders are reported to be due to hold a brief video summit to discuss the negotiations on Thursday night, while EU ambassadors are set to be updated by negotiating teams on Friday morning, according to Reuters.
UK business minister Alok Sharma said on Wednesday that the two sides had made “progress” in talks, which have hit a stumbling block over fishing rights and the UK’s reluctance to align permanently with EU ‘level playing field’ rules on tax, employment, state aid and other areas.
Sharma said there was “still some way to go” however, despite the clock ticking down and worries a deal must come soon for it to be fully ratified on both sides by the end of the year.
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