Talks to unlock a post-Brexit EU-UK trade deal continued late into Saturday night in Brussels and are expected to resume on Sunday, as a deadline for assessing the state of negotiations looms.
Boris Johnson, UK prime minister, and Ursula von der Leyen, European Commission president, will speak on Sunday to assess whether there is any point in the negotiations continuing.
Although both sides have sounded increasingly pessimistic over the prospects for a deal ahead of the end of Britain’s Brexit transition period on January 1, the talks have narrowed to one main outstanding issue.
Negotiations on Saturday centred on trying to accommodate the EU’s demands for a mechanism that would make tariff-free trade dependent on the two sides maintaining a regulatory “level playing field”.
Britain has rejected different models for the instrument, known in the talks as an “evolution mechanism” or “equivalence mechanism”, which is intended to deter the UK from undercutting the EU if the bloc decides to raise its standards in areas such as environmental rules or workers’ rights.
Mr Johnson has argued that the mechanism amounted to leaving the UK tethered to EU rules — something EU leaders, including Dutch prime minister Mark Rutte, denied on Friday.
One EU diplomat said Brussels had proposed that the mechanism be administered by a joint committee of EU-UK officials, with arbitration in case of disputes, but that this still went too far for the British government.
Negotiators also continued work on EU fishing rights in UK waters.
One EU official said the prospects of a deal were on a” knife-edge”, while diplomats in Brussels questioned whether Mr Johnson was truly interested in an agreement given the political risks both sides would have to run to strike the necessary compromises.
A British government official said on Saturday night: “Talks are continuing overnight, but as things stand the offer on the table from the EU remains unacceptable.
“The prime minister will leave no stone unturned in this process, but he is absolutely clear: any agreement must be fair and respect the fundamental position that the UK will be a sovereign nation in three weeks’ time.”
British officials said the situation remained “very difficult”, while senior figures in London fulminated in private against what Mr Johnson regards as the EU’s unreasonable demands.
Michael Howard, former Conservative leader, and Kim Darroch, the UK’s former ambassador to the EU, told the BBC’s Week in Westminster that Mr Johnson’s threat — now withdrawn — to break last year’s EU withdrawal treaty in relation to Northern Ireland had contributed to a lack of trust between the two sides.