Pound drops as UK-EU trade deal slips away

The pound slid today after EU’s chief negotiator, Michel Barnier, warned that a trade deal between the EU and UK was slipping away.

He said: “Those who were hoping for negotiations to move swiftly forward this week will have been disappointed."

But his UK counterpart David Frost added that a deal on post-Brexit relations was “still possible”.

“There are ... significant areas which remain to be resolved and even where there is a broad understanding between negotiators, there is a lot of detail to work through,” Frost said in a statement. “Time is short for both sides.”

After 46 years of membership, the UK became the first country ever to leave the EU on January 31.

The two are now negotiating a new partnership, to be effective from 2021, on everything from trade and transport to energy and security.

Disagreements over state aid rules and fishing quotas have so far thwarted a deal, which the EU says must be in the making in time to be approved at an October 15-16 summit of the bloc’s 27 national leaders to enable ratification this year.

Beyond the biggest stumbling blocks, differences also linger in discussions on migration, security, dispute-settling mechanisms, human rights guarantees and other areas.

With the coronavirus pandemic wreaking economic havoc and both sides of the Channel wanting to avoid an even deeper recession, EU sources had been relatively upbeat in recent weeks that an agreement could be reached on time.

But Barnier sounded downbeat saying he was “disappointed and concerned” because Prime Minister Boris Johnson had told the EU he wanted to speed up the negotiating process over the summer.

“This week, once again, as in the July round, the British negotiators have not shown any real willingness to move forward on issues of fundamental importance for the European Union,” Barnier said. “And this despite the flexibility which we have shown over recent months.”

He said negotiations too often appeared to be going backwards this week rather than forwards and so, at this stage, an agreement looked unlikely.

“On the European side, we are very concerned about the state of play in our negotiations. The clock is ticking,” Barnier said.

An EU diplomat said few had expected significant progress this month, and there are better prospects for headway to be made in the next round of negotiations, which will be held in London during the second week of September.

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