Are Brexit trade talks on the brink of collapse? Michel Barnier says EU 'prepared for all scenarios'

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Are Brexit trade talks on the brink of collapse? Britain and EU fail to close gaps over fishing rights and state aid with Michel Barnier vowing that Brussels is 'prepared for all scenarios'

Breakthrough continues to elude UK and the EU during post-Brexit trade talksBut Lord Frost and Michel Barnier expected to recommend that talks continueThey believe deal possible and want new round of talks in London this weekend 

By David Wilcock, Whitehall Correspondent For Mailonline

Published: 10:20 GMT, 5 November 2020 | Updated: 10:20 GMT, 5 November 2020

Fears are growing over the future of a post-Brexit EU trade deal today after talks between the two sides broke up with a warning from Brussels that it was 'prepared for all scenarios'.

The bloc's chief negotiator made the allusion to both sides walking away without an agreement on December 31 after warning 'very serious divergences' remained between the two sides.

The UK's lead negotiator Lord Frost also gave a downbeat assessment of progress but said work would continue to paper over disagreements on fishing rights and state aid.

He last night tweeted: 'Progress made, but I agree with Michel Barnier that wide divergences remain on some core issues. We continue to work to find solutions that fully respect UK sovereignty.'  

The bloc's chief negotiator made the allusion to both sides walking away without an agreement on December 31 after warning 'very serious divergences' remained between the two sides

The UK's lead negotiator Lord Frost also gave a downbeat assessment of progress but said work would continue to paper over disagreements on fishing rights and state aid

Brexit 'upheaval' warning as new car sales slump

Demand for new cars fell by 1.6 per cent last month compared with October 2019, new figures show.

The Society of Motor Manufacturers and Traders (SMMT) said just 140,945 new registrations were recorded in the UK last month, making it the weakest October since 2011.

Restrictions in Wales as part of the country's coronavirus 'firebreak' accounted for more than half of the year-on-year losses.

SMMT chief executive Mike Hawes said: 'When showrooms shut, demand drops, so there is a real danger that with England today entering a second lockdown, both dealers and manufacturers could face temporary closure.

'What is not in doubt, however, is that the entire industry now faces an even tougher end to the year as businesses desperately try to manage resources, stock, production and cashflow in the penultimate month before the inevitable upheaval of Brexit.

'Keeping showrooms open - some of the most Covid-secure retail environments around - would help cushion the blow but, more than ever, we need a tariff-free deal with the EU to provide some much-needed respite for an industry that is resilient but massively challenged.'

However last night EU sources told the Telegraph that the UK had failed to 'engage sufficiently' in key areas of disagreement. 

The sticking points remain the same - fishing rights and state aid - and Mr Barnier tweeted that 'These are essential conditions for any economic partnership'. 

Senior EU diplomats said intensified Brexit negotiations with Britain in recent days have yielded only moderate progress.

One told Reuters Mr Barnier gave no timeline for an agreement or even any certainty that a trade deal between the 27-nation EU and Britain would be clinched by a mid-November deadline.

'He gave no timeline and he was rather uncertain about a deal,' the diplomat said.

It is now two weeks since formal trade discussions resumed between the two sides after a tense standoff. 

But disputes over post-Brexit fishing rights and the so-called 'level playing field' on rules to ensure fair competition are still blocking a deal.

Meanwhile, the spread of coronavirus is complicating the talks amid fears that an outbreak of the disease among negotiators could derail the whole process. 

The latest round of discussions has been taking place in Brussels which has the highest rate of Covid-19 infections in Europe.

Mr Barnier last night said that talks between both sides on even a rudimentary deal still faced too many challenges to yield a result anytime soon.

'At this stage, there are still too many difficulties remaining on important topics,' he told reporters as he went to brief the envoys of the 27 member states.

But he insisted though that the bloc wasn't ready to give up.

'We are working intensively and will continue working to find solutions,' he said.  

Time is now running out for the two sides to agree and implement a trade accord before the end of the post-Brexit transition period in December. 

Ratifying the deal could take the EU as long as six weeks which means an agreement will likely need to be in place by the middle of November if it is to be rolled out for the start of 2021. 

The prospect of talks continuing came after Downing Street snubbed a legal threat from Brussels over Mr Johnson's plans to tear up parts of the Brexit divorce deal.     

The EU started legal proceedings against the UK at the start of October and gave Mr Johnson one month to formally respond. 

But Number 10 yesterday confirmed it had not bothered to send a reply to the bloc, prompting the EU to warn it will now consider escalating the legal dispute.  

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