UK and the European Union were on the cusp of striking a narrow trade deal today, swerving away from a chaotic finale to a Brexit split that has shaken the 70-year project to forge European unity from the ruins of World War II.
While a last-minute deal would avoid the most acrimonious ending to the Brexit divorce, the United Kingdom is heading for a much more distant relationship with its biggest trade partner than almost anyone expected at the time of the 2016 Brexit vote.
Sources in London and Brussels said a deal was close as British Prime Minister Boris Johnson held a late-night conference call with his senior ministers, and negotiators in Brussels pored over reams of legal trade texts.
There was no official confirmation of a deal but Johnson was expected to hold a news conference on Christmas Eve – just seven days before the UK turns its back on the EU’s single market and customs union at 2300 GMT on Dec. 31.
News that a deal was imminent, first reported by Reuters, triggered a surge in the pound while bond yields rose across the world. The United Kingdom formally left the EU on Jan. 31 but has since been in a transition period under which rules on trade, travel and business remained unchanged. But from the end of this year, it will be treated by Brussels as a third country.
If they have struck a zero-tariff and zero-quota deal, it would help to smooth the trade in goods that makes up half their $900 million in annual commerce. It would also support the peace in Northern Ireland – a priority for U.S. President-elect Joe Biden, who had warned Johnson that he must uphold the 1998 Good Friday peace agreement.
Even with an accord, some disruption is certain from Jan. 1 when Britain ends its often fraught 48-year relationship with a Franco-German-led project that sought to bind the ruined nations of post-World War Two Europe together into a global power.
After months of talks that were at times undermined by both COVID-19 and rhetoric from London and Paris, leaders across the EU’s 27 member states have cast an agreement as a way to avoid the nightmare of a “no-deal” exit.
But Europe’s second-largest economy will still be turning its back on both the EU’s single market of 450 million consumers, which late British prime minister Margaret Thatcher helped to create, and its customs union.