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Face-to-face negotiations kick started this week in Brussels between the UK and EU. Negotiations have continued through the coronavirus pandemic but have been taking place virtually.
The UK’s chief Brexit negotiator, David Frost, and his EU counterpart, Michel Barnier, have not met in person since March due to the pandemic.
Prime Minister Boris Johnson has refused to extend the transition period past the end of the year.
During this period the UK is continuing to follow some EU rules while a trade deal is being decided.
Cabinet Minister Michael Gove confirmed that there would be no extension.
In a tweet he wrote: “On 1 January 2021, we will take back control and regain our political and economic independence.”
Both the UK and the EU have acknowledged that a deal would need to be in place by October to be established by the end of 2020.
Speaking to Express.co.uk, Anand Menon, Director of UK in a Changing Europe explained how there is a chance that a no trade deal could be on the Brexit table.
He said: “You could end up with neither side being flexible. Both sides are going to have to be flexible to get an agreement and if they are not then we won’t.
“I don’t think we’re going to get anything like an agreement until Autumn and I think in the Autumn what you need is for the political leaders on both sides to say ‘Ok here are the compromises we’re willing to make’.
“But you could imagine a situation where we get to September/October and you’ve got a massive second spike of coronavirus and everyone is completely and utterly distracted by that. In that case then I think all bets are off.”
The Prime Minister reportedly does not want talks to continue past September because it will leave businesses with little time to get ready for the end of the transition period in December.
A no trade deal scenario would mean both sides would levy tariffs on each other’s goods.
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Ahead of this week’s face-to-face negotiations, Mr Frost said: “These meetings will be smaller and focused on seeing whether we can begin to make genuine and rapid progress towards an agreement.
“We will go to Brussel’s in good faith to engage with the EU’s concerns.
“This needs to be a real negotiation and some of the EU’s unrealistic positions will have to change if we are to move forward.”
Mr Menon explained how there will be significant impacts that will come from having a no trade deal scenario at the end of the year.
He said: “Trade will be harder with no deal than it would be with a deal, harder and more expensive.
“The other thing is politically if you get no deal the danger then is that you end up in a sort of spiral of mutual recrimination as both sides blame the other for the sort of failure to get a deal.”
Although the UK is on track to leave the transition period at the end of the year, the timing of a confirmed trade deal is still unknown.
Mr Menon said: “I don’t think there is any doubt at all that we’ll leave the transition period at the end of this year.
“Now it might be that we sign a trade deal that has an implementation phase that sort of phases out our membership of the single market and the customs unions so that the shift isn’t quite as abrupt as it could have been.”
German Chancellor Angela Merkel has urged Brussels to plan for a no trade deal scenario.
Speaking to the German parliament, Ms Merkel warned that the EU “must and should prepare for a situation in which an agreement does not happen”.
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