UK government sources have put the chances of a Brexit deal at no higher than 50% as Boris Johnson and Ursula von der Leyen prepare to open direct talks after their negotiators failed to come to terms in London.
Leaving King’s Cross for Brussels on Saturday morning, the EU’s chief negotiator, Michel Barnier, told reporters: “We keep calm, as always, and if there is still a way, we will see.”
The European commission president and the UK prime minister, who is at Chequers, are expected to speak on the phone in the late afternoon. EU sources say the talks have come down to big political decisions on the three contentious issues: fisheries, fair competition and dispute resolution.
Every other part of the treaty, which is expected to run to more than 600 pages, is in order, it is understood.
The negotiations had long been expected to end with arbitration between the two political leaders, but it is by no means certain that an acceptable way forward will be found.
Should the two leaders give their negotiators further instruction, more work will be completed on the potential agreement in time for EU ambassadors in Brussels and the cabinet in Westminster to scrutinise the terms as early as Sunday, but the timeline could slip into the early part of the week.
Johnson and von der Leyen will discuss how they might pink their red lines to find common ground on the “level playing field” provisions and suitable access for EU fishing boats to British waters at the end of the year.
EU sources rejected claims from Downing Street that a demand for a 10-year transition period for phasing in changes for European fishing fleets was the big obstacle to a deal. “The UK wants a short transition, we have asked for a much longer one. There is a middle way, and that is not the cause of any problem,” a source said.
The more significant difficulties relate to the EU’s need for assurances that the UK will not be able to distort trade through subsidies or by undercutting on environmental, labour and social standards.
The ways and means of providing for such guarantees, without stymying independent policymaking in Whitehall, have dogged the talks from the start.
EU sources said London had not even conceded the principle of “non-regression” from common standards at the end of the transition period yet, because of differences over definition and the mechanics of dispute resolution.
A major bone of contention for the UK side is Brussels’ intention to exempt all EU funding from the future state aid rules, a move raised by one of the British deputy negotiators some weeks ago but which has yet to be resolved.
In a joint statement on Friday evening, the UK’s chief negotiator, David Frost, and Barnier said they had not been able to come to terms on the final issues and that the historic trade and security negotiation would be paused.
“After one week of intense negotiations in London, the two chief negotiators agreed today that the conditions for an agreement are not met, due to significant divergences on level playing field, governance and fisheries,” Barnier and Frost said in their statement.
“On this basis, they agreed to pause the talks in order to brief their principals on the state of play of the negotiations. President von der Leyen and prime minister Johnson will discuss the state of play tomorrow afternoon.”
Von der Leyen, a former German defence minister, has been privately criticised by diplomats from some member states for her zeal in seeking a deal with the UK. It is feared in some EU capitals that, as with the German chancellor Angela Merkel, the intention is to secure an agreement at any price, as one senior EU diplomat in Brussels described it.
Merkel’s spokesman urged both sides on Friday to look past their red lines to strike a deal, while the French government said it could wield its veto if the deal failed to match expectations.
Merkel’s spokesman, Steffen Seibert, said: “For the chancellor, and that hasn’t changed in recent weeks, the willingness to compromise is needed on both sides. If you want to have a deal then both sides need to move towards each other. Everybody has their principles, there are red lines, that’s clear, but there’s always room for compromise.”