The president of the European Commission is expected to say that a UK-EU trade deal is still possible but not at any price in her annual flagship speech on Wednesday.
Ursula von der Leyen is expected to use her State of the Union address in the European Parliament in Brussels to double down on her warning that Britain must drop plans to renege on the Withdrawal Agreement. Backsliding on the Brexit treaty would seriously damage the trust needed to finalise the agreement, she has previously warned.
Brexit is expected to only take up a small part of the speech. It will largely focus on the European Commission’s policy priorities for the future and in particular the bloc’s relations with China, its response to the coronavirus pandemic and accelerating plans to reach net zero carbon emissions by 2050.
The contents of the speech are a closely guarded secret but Mrs von der Leyen could repeat her warning that the Internal Markets Bill, if approved by Parliament, would jeopardise the negotiations on the future trading relationship.
The EU has already given Britain a deadline of the end of the month to drop offending provisions in the Bill, which it says breaks international law and the Withdrawal Agreement. The Bill disapplies provisions on state aid and requirements on export declarations on goods from the UK to Northern Ireland.
Brussels has warned that it reserves the right to take legal action against the UK in the European Court of Justice, could trigger dispute mechanisms in the Brexit treaty and ultimately freeze other agreements with the UK as punishment.
EU diplomats had suggested that Mrs von der Leyen could use the speech to tee up political level talks between herself, Boris Johnson and Angela Merkel. Those talks would be designed to break the deadlock on divisive areas before handing back to the chief negotiators to smooth out the details and pave the way to a deal before the end of October.
That is now seen as unlikely, given that relations between the two sides have plummeted to a new low.
The commission is keen to keep the talks over the Withdrawal Agreement separate to the trade deal in order to minimise the increasing risk of no deal.
Mrs von der Leyen will address MEPs in Brussels on Wednesday morning. On Tuesday leaders of the European Parliament groups, which will have an effective veto over any trade deal with Britain attacked Boris Johnson.
Manfred Weber, leader of the centre-Right European People's Party, the largest group in the European Parliament, said, “The draft bill is unprecedented and shocking. This is what populism can do to a country, which was a global leader of international law and trade.
“We need clarification within the next few days. Why negotiate an agreement about the future if we cannot count on our agreements of the past?”
Philippe Lamberts, member of the Brexit coordination group and leader of the European Greens, said, “The United Kingdom has joined too long a list of countries who abandoned the idea of a rules-based international order in favour of a world where might is right or political expediency is right.”