EU officials have urged caution on the progress of trade talks with the UK even after some officials in London spoke optimistically of a breakthrough in the discussions.

With the latest round of negotiations set to wrap up on Friday, Michel Barnier, the EU’s chief Brexit negotiator, is expected to set a high bar before agreeing to enter intensified “submarine” talks of senior officials aimed at embarking on a final push for a deal.

In closed-door meetings in Brussels, the EU’s Brexit negotiator has insisted that progress needs to be made in four key areas — fisheries, assurances of a level playing field for business, governance arrangements and justice co-operation.

Several EU diplomats said they did not expect submarine talks — also known as the “tunnel” — to begin as soon as next week, with several predicting that this would not happen until after a summit on October 15 and 16, when Mr Barnier is set to report on progress to EU leaders.

The UK entered the talks this week tabling new negotiating texts on almost all outstanding issues including fisheries and the level playing field © Dan Kitwood/Getty Images

One EU official said it was impossible to make predictions while the round was still ongoing, but that they would be “surprised” if the two sides were able to enter submarine talks next week.

Earlier, UK officials gave a rosy view of the state of play, claiming it was almost certain that negotiators would enter the tunnel phase. The UK entered the talks this week tabling new negotiating texts on almost all the outstanding issues including fisheries and the level playing field.

In London there is a growing sense of optimism that outstanding differences can be resolved, with Downing Street saying: “We are continuing to work constructively to seek to reach an agreement with the EU.”

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Senior ministers, including Michael Gove, cabinet office minister, and Rishi Sunak, chancellor, are pushing for an agreement. The prime minister’s allies say Mr Johnson is determined to get an agreement on the right terms.

One British official close to the discussions said the mood in London had moved “from about 30 per cent chance of a deal to the other way around — I think it’s almost certain we’ll enter the tunnel”.

The official added that a possible agreement on state aid was in the offing and that a landing zone had been identified: “Fishing is the last sticking point. We both have to jump together.” Other British officials were more cautious, saying that significant differences remained.

Officials close to Mr Barnier played down the significance of new British texts tabled for this week’s talks, adding they offered nothing new.

The trade talks are continuing alongside an escalation in the dispute between the EU and UK over prime minister Boris Johnson’s plans to enact legislation overriding parts of last year’s withdrawal agreement.

Ursula von der Leyen, the European Commission’s president, said on Thursday morning that Brussels had sent a ‘letter of formal notice’ to the UK over the internal market bill © Johanna Geron/AP

Ursula von der Leyen, the European Commission president, said on Thursday morning that Brussels had sent a “letter of formal notice” to the UK over Mr Johnson’s internal market bill — the first stage of a process that could lead to Britain being hauled before the European Court of Justice. The letter is the first stage of formal EU “infringement proceedings”.

Speaking as she arrived for an EU summit being held in Brussels, Ms von der Leyen said: “Our UK friends intend to break the withdrawal agreement with the internal market bill. We have given them one month to withdraw the difficult parts and this has not happened.”

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Despite the continued differences between negotiators over the future relationship, key figures on the EU side including Mr Barnier have spoken in recent days of an improved mood in the talks.

Mr Barnier has insisted the EU already moved substantially in the talks in July, including ensuring the deal does not rely on EU law or the European courts. Brussels’ line is that the UK has never fully responded to those overtures.

This week has been seen on the EU side as an important opportunity for them to finally do so.

Via Financial Times