Fears of no-trade deal Brexit rise as UK says progress unlikely at talks

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LONDON/BRUSSELS (Reuters) – The chances of Britain leaving the European Union without a trade deal have risen sharply as negotiations have been threatened by London s insistence that it have full autonomy over its state aid plans, negotiators and diplomats said.

The United Kingdom left the EU on Jan. 31, turning its back after 47 years on the post-World War Two project that sought to build the ruined nations of Europe into a global power.

The British exit followed more than three years of wrangling over an exit deal since the 2016 referendum that sent shockwaves through global financial markets. Since Brexit, talks on a new trade deal have so far made little headway.

But fears in London, Brussels and other European capitals are mounting that a British exit without a trade deal could sow yet more economic chaos amid the turmoil of the coronavirus crisis which has hammered European economies.

Ahead of talks next week, Britain said there was likely to be little progress due to the EU s refusal to be flexible.

“We will negotiate constructively but the EU s stance may, realistically, limit the progress we can make next week,” Britain s top negotiator David Frost said.

“From the very beginning we have been clear about what we can accept in these areas, which are fundamental to our status as an independent country.”

Failure to reach a trade deal could roil financial markets as nearly a trillion dollars in trade, from car parts and medicines to lamb and fish, would be thrown into turmoil.

Sterling fell 0.6% to $1.3199.

Prime Minister Boris Johnson said if the EU was sensible, it would give Britain the Canada-style solution it is seeking. But he added that Britain was ready for any eventuality.

“The chances for a deal, or a no-deal, are 50/50,” said one senior EU diplomat. “There has been absolutely no movement from the British side in the talks. If this approach doesn’t change quickly, we won’t be able to negotiate a deal in time.”

European Council President Charles Michel told reporters: “Sooner or later, the UK should clarify what they want. It s not possible to leave the European club and at the same time keep all the benefits.”

“We have no certainty that we ll reach a deal. I hope it will be possible – but not at all cost,” he said

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