British and European Union trade negotiators embarked on high-stakes talks aimed at forging a new post-Brexit relationship on Monday, with timing tight and the sides far apart on key issues.
The EU’s chief negotiator Michel Barnier and his U.K. counterpart David Frost met in Brussels, launching several months of intense talks that will mobilize about a hundred officials on each side.
The negotiations began just over a month after Britain left the EU, and are meant to wrap up by the end of this year, an exceedingly tight timeframe that few see as feasible for anything but a bare-bones accord.
The deadline is effectively Dec. 31, the end of the U.K.’s current transition period during which it trades like an EU member with no tariffs or other barriers.
British Prime Minister Boris Johnson has ruled out extending the transition and both sides are looking to an EU-U.K. summit in June to decide whether talks are worth continuing.
Meanwhile, the U.K. is insisting on setting its own rules in the name of “economic and political independence.” The acrimony pushed the British pound 1.3% lower against the euro Monday, amid fears that Britain’s hard-line stance would hurt the economy.
Experts warned that the two sides are on a collision course, with a deal highly unlikely without a major concession. Fabian Zuleeg, head of the European Policy Centre, said he was “pessimistic” about the outcome given the U.K.’s fervent desire to break from EU rules.
“It’s very difficult to see where they could meet to make this work,” he said. If the British government “sticks to their line, there cannot be a deal.”
If there is no broad trade deal, economic pain will be felt on both sides, but especially in Britain and Ireland, the EU member most dependent on trade with the U.K.
Without a deal, U.N. economists calculate the trade hit would see the U.K. annually lose export revenues of up to 29 billion euros ($32 billion). The EU buys nearly half of all British exports. Johnson and his government appear ready for British businesses to bear the pain from a no-deal.
