Brexit talks on 'knife edge' as EU backs down over fishing

The EU backed down over post-Brexit fishing arrangements on Sunday night – but the chances of a trade deal remained "on a knife edge", with other key issues unresolved.

Sources in Brussels said talks on fish were "closing in" on a political agreement, but there were warnings that no progress had been made on the far bigger problem of the "level playing field", meaning the two sides could still end the talks without a deal as early as Monday night.

On Monday evening, Boris Johnson will speak to Ursula von der Leyen, the European Commission president, for the second time in 48 hours to decide whether to allow negotiations to continue into Tuesday or – if there is no prospect of agreement – to walk away for good.

On Sunday night Michael Martin, the Irish prime minister, put the chances of a deal at 50-50, saying: "Things are on a knife edge." 

The EU had demanded unfettered access to Britain's waters for 10 years when the British team was ambushed with a set of last-minute demands last Thursday. Talks were paused as a result but, when the two sides resumed negotiations in Brussels on Sunday, the EU signalled that it was ready to compromise on its fishing demands.

Sources close to the talks have suggested Britain – which had already offered a three-year transition period on fishing arrangements – could offer an even longer transition of around five years. In return, the EU would have to hand back at least 50 per cent of its fish quotas from January 1 instead of the 18 per cent it is currently offering.

British sources stressed late on Sunday night that a final agreement on fishing was yet to emerge.

An EU climbdown over fish would be hugely embarrassing for Emmanuel Macron, the French president, who has been blamed for crashing the talks last week when both sides believed a deal was within reach.

Mr Macron, who will be standing for re-election in 2022, had promised French fishermen that he would stand firm, sending his prime minister, Jean Castex, to Boulogne last week to board a trawler and promise solidarity with the industry.

Sources on both sides warned that negotiations were ongoing and fluid as they stretched into Sunday night.  

One EU diplomat said: "The fish discussions are closing in on a political landing zone [but] discussions are slow. Expectations are low on a solution being found in the next 24 hours."

British sources suggested finding agreement on fishing was "the easier part" of closing out a deal because there is some room for compromise on both sides, warning that the issue of "level playing field" guarantees was an "existential threat" to British sovereignty which will only be resolved if Mr Macron and other leaders make a significant shift.

The EU wants the right to impose "lightning" tariffs on UK goods if it decides Britain has breached the terms of the trade deal by diverging too far from EU rules and standards. Mr Johnson has insisted that Britain, as a sovereign state, will set its own rules and will settle for no deal rather than being tied to EU rules.

The two sides also remain far apart on the mechanism to settle any future disputes that might arise if either side breaks the terms of a trade deal.

Michel Barnier, the EU's chief Brexit negotiator, will hold a "stock taking" meeting with ambassadors from the 27 EU member states at 6.30am on Monday, which could provide fresh impetus for the talks.

Although both sides had made clear that they wanted the negotiations to be resolved one way or another by Monday night, a senior Government source said they could go on until Wednesday if it became clear that a deal was close.

The source said: "If we are still talking on Tuesday it will be a good sign, because it will mean we are on the right path and a deal is doable. We could even carry on until Wednesday if it's just a case of sorting out details, but there is a European Council meeting of EU leaders on Thursday and they won't want the talks to still be going on by then."

Diplomatic sources said France and Germany had been squabbling over the weekend, with France accusing Berlin of going soft on Britain to avoid no deal. On Sunday, France repeated its threat to veto any deal that is agreed if it crossed its own red lines.

However an EU diplomat said on Sunday night: "Recent hours have seen France and Germany finding common ground on the level playing field. Germany has made clear it supports Paris in the push for strong provisions on fair competition."

Mr Johnson, meanwhile, was warned by Brexiteer Tory MPs not to "lose perspective" by agreeing to a deal that would amount to "Brexit in name only".

Former Cabinet minister Theresa Villiers said: "There is a danger when you get into long negotiations like this that you lose your perspective because you spend so long focusing on one aspect or another, and end up agreeing to something that wasn't what you set out to achieve.

"If we walk away without a deal I think it will only be temporary because the EU will come back next year asking for a deal once reality bites."

Mr Martin said it was vital that "common sense prevails" and that a post-Brexit trade deal is reached, adding: "A no-deal would be very damaging to all concerned, to the United Kingdom, to the Irish economy and indeed to the economies of member states as well."

He put the chances of a deal at 50-50, adding: "Things are on a knife edge… I don't think one can be overly optimistic about a resolution emerging. If it takes an extra couple of days to get this resolved, it's better to do that than to rush this."