Boris Johnson warned final 12 months {that a} no-deal Brexit would symbolize “a failure of statecraft for which we might all be accountable”. On Wednesday, over dinner in Brussels, that statecraft will likely be put to the last word take a look at.

Mr Johnson’s dinner assembly with Ursula von der Leyen, European Fee president, is seen as a final probability to salvage commerce talks and put the UK’s post-Brexit relationship with the EU on a strong footing. The political and financial stakes might hardly be larger.

Forward of the talks, either side circled the wagons. Mr Johnson’s cupboard was mentioned by Downing Road to be “united” behind the prime minister and his risk, if needed, to take Britain out of its post-Brexit transition interval with out a commerce deal on January 1.

In the meantime, Germany, an enormous exporter of products to the UK, placed on a present of unity with France, whose president Emmanuel Macron was resuming his acquainted position because the robust man of Brexit.

Detlef Seif, chief Brexit spokesman of Angela Merkel’s CDU celebration, mentioned: “It’s definitely true that France is extra affected by the fisheries subject than Germany, so clearly they’ve a unique view. 

“However the concept there are variations between Merkel and Macron on that is only a figment of the Brits’ creativeness.”

The German and French leaders have agreed to not communicate individually to Mr Johnson — an thought mentioned in Downing Road — however to depart the endgame to Michel Barnier, EU chief negotiator, and Ms von der Leyen.

British makes an attempt to drive a wedge into the unity of the EU27 have been a constant however unsuccessful characteristic of the Brexit saga.

Katja Leikert, chief CDU spokeswoman on Europe, mentioned: “We have now to point out the UK the purple card at any time when they attempt to bilateralise the talks.” A senior French official mentioned: “There’s a negotiating staff. Full cease.”

Mr Johnson on Tuesday evening met David Frost, his chief negotiator, in London to see whether or not a “touchdown zone” for a deal could possibly be recognized — if either side have been ready to maneuver.

Mr Frost spent Tuesday morning with Mr Barnier figuring out the excellent areas of disagreement earlier than lastly elevating them to the political stage with Mr Johnson and Ms von der Leyen on Wednesday.

British officers insisted the talks in Brussels over dinner can be a “actual negotiation”, whereas EU diplomats mentioned they have been supposed to unblock the talks with particulars to be hammered out later by Mr Barnier and Lord Frost.

Downing Road insisted that the detailed negotiations couldn’t drag into 2021, though EU officers maintained that substance reasonably than timing was key.

Whereas the query of fisheries stays unresolved, either side agree {that a} deal over entry and quotas is feasible. It’s the query of the truthful competitors “stage taking part in area” — and its enforcement — that is still the most important downside.

Brussels desires to ensure it will likely be in a position to react to any massive hole in ambition between the EU and UK’s environmental or labour requirements by lowering market entry for British items. 

It has proposed an “evolution mechanism” beneath which the 2 sides would maintain consultations if one aspect was anxious that its companies have been being put at a aggressive drawback.

What would a no deal imply?

  • Tariffs on UK exports to the EU of as a lot as 40 per cent. Agriculture and fisheries can be hit particularly laborious: (EU duties on UK scallops can be 20 per cent for instance, and 15 per cent on sausages).

  • Disruption to co-operation within the battle towards terrorism and organised crime as a result of present preparations for data sharing would lapse.

  • The EU would lose fishing rights in UK waters, with future entry hinging on annual negotiations with the UK beneath the United Nations Conference on the Legislation of the Sea.

  • Commerce can be hit by the complete pressure of latest customs and veterinary checks on the border and at firm premises.

  • Cross-border employees would face elevated forms in securing entry to advantages and pension rights.

  • Disruption to commerce in civil nuclear supplies and to the cross-border vitality market.

  • Misplaced alternatives for UK scientific researchers to work along with European counterparts.

Ought to or not it’s established that there’s a actual downside however talks fail, the deprived celebration might impose tariffs or different measures to re-level the taking part in area. 

The UK insists that, whereas it is able to agree to not weaken present regulatory requirements — a precept often called non-regression — the EU plans go far past this.

“What the EU has proposed just isn’t non-regression however de facto alignment,” mentioned a UK official. 

Linked to this are EU calls for — additionally resisted by the UK — for both aspect to have the ability to punish the opposite if it violates its commitments. Beneath such a system, the EU might hit imports from one sector to counterbalance British rule-breaking that impacts one other.

The UK sees the cross-retaliation thought as disproportionate, arguing that it might result in an unstable and unpredictable buying and selling relationship.

The 2 sides are additionally at loggerheads over makes an attempt by Brussels to exclude EU-level spending from joint commitments on state help. EU negotiators argue that, inside the union, EU stage funds corresponding to its regional help cash are exempt from state-aid restrictions.

The extent taking part in area subject cuts to the center of Mr Johnson’s dilemma — the one he used to assert Britain would by no means need to face — that full sovereignty over UK guidelines means much less entry to the EU single market.

The financial dangers of failing to compromise have been laid naked final month by the impartial Workplace for Finances Accountability, which estimated that there can be a 2 per cent hit to the British financial system subsequent 12 months if no free commerce deal was signed, equal to £40bn, on prime of earlier Brexit and coronavirus-related losses.

Companies have grow to be more and more alarmed as the times tick by with out a deal, inflicting panic amongst firms that also lack the required particulars to plan for UK-EU border controls.

The British Chambers of Commerce mentioned that companies nonetheless had inadequate official data obtainable in 24 important areas, which has undermined their means to organize for January 1.

James Sibley, head of worldwide affairs of the Federation of Small Companies, mentioned it was “deeply regarding that, greater than 4 years on from the referendum, small corporations nonetheless have so little readability round what our buying and selling relationship with the EU will seem like when the transition interval ends in 25 days’ time”.

Reporting staff: George Parker, Daniel Thomas and Chris Giles in London; Jim Brunsden and Sam Fleming in Brussels; Man Chazan in Berlin and Victor Mallet in Paris