'Intensified' Brexit trade talks get under way in Brussels

Oscar Williams-GrutSenior City Correspondent, Yahoo Finance UK
Yahoo Finance UK
EU chief Brexit negotiator Michel Barnier (R) and leader of the UK negotiating team David Frost (L) begin five days of talks on Monday. Photo: Olivier Hoslet/Pool Photo via AP
EU chief Brexit negotiator Michel Barnier (R) and leader of the UK negotiating team David Frost (L) begin five days of talks on Monday. Photo: Olivier Hoslet/Pool Photo via AP

The latest round of Brexit trade talks gets underway in Brussels on Monday, with both sides hoping to break the deadlock that has stymied discussions so far.

Michel Barnier, the European Union’s chief negotiator, and David Frost, the leader of the British negotiating team, will begin five days of talks on issues ranging from fisheries to state aid and criminal justice. It marks the first face-to-face meeting of the two negotiators since March.

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This week also marks the beginning of five weeks of “intensified” talks. It comes after little progress was made in the previous five rounds of trade negotiations. UK prime minister Boris Johnson and his EU counterpart Ursula von der Leyen held a high-level meeting earlier this month aimed at establishing common ground to break the deadlock.

“Since the last round of negotiations, a high-level meeting took place between prime minister Johnson and the presidents of the European Commission, Council and Parliament, where the two sides agreed in their statement that ‘new momentum was required’ in the discussions,” Jim Reid, a strategist at Deutsche Bank, wrote in a note to clients on Monday.

“There does seem to be a bit more positivity now than there was a month ago but much work still needs to be done.”

READ MORE: Bank of England tells banks to 'prepare' for no deal Brexit

Frost said on Twitter ahead of the talks that he hoped to “make genuine and rapid progress towards an agreement”. However, he cautioned: “UK sovereignty, over our laws, our courts, or our fishing waters, is of course not up for discussion.”

Both sides have only until the end of December 2020 to agree a trade deal, a timetable experts say is almost unheard of. Tuesday marks the deadline for the agreement of any extension to the negotiating timetable, but Johnson has repeatedly signalled that his government is unwilling to agree to an extension.

“Without clear signs of where compromise might occur, with no extension of the transition period we see a ‘skinny' deal as the best outcome,” analysts at Barclays wrote in a note to clients on Friday. “While it might be framed as a political success, economically, this outcome is not brilliant.”

Analysts at Barclays said on Sunday they expect to see “heightened volatility” in the pound’s exchange rate with the euro as talks near December’s deadline.

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