Brexit talks are set to continue on Monday after negotiations failed to reach an agreement over the weekend, passing the Sunday deadline set by the European Parliament for the UK and EU to agree on a trade deal.
In what were touted as last-ditch talks on the weekend, the two sides once again failed to reach consensus with the issue of fishing being the main stumbling block, just 11 days before the UK is set to crash out of the trading bloc without a trade deal.
"The talks remain difficult and important differences remain. We continue to explore all avenues to reach an agreement," a British source said on Sunday evening.
A European source confirmed that they "expect" talks to resume on Monday, with neither side wanting to back down or end the talks.
MEPs had set a deadline of midnight on Sunday so that they would have enough time to study and ratify any agreed text, so it can come into law on January 1.
After hearing there was no agreement on Sunday, David McAllister, a German MEP who chairs the Foreign Affairs Committee said "the European Parliament will not be in a position to grant consent to an agreement this year", adding there will be a meeting tomorrow morning.
Britain's parliament must also approve any deal. MPs are now on their Christmas break until January, although they can be called back on 48 hours' notice to approve an agreement if one is struck.
An agreement reached at the 11th hour could still enter into force provisionally, with ratification by the European Parliament afterwards.
But according to several European sources, such a scenario is only technically possible if a compromise is reached before Christmas, otherwise a no-deal exit, at least for a few days, seems inevitable.
The UK has two monumental challenges on its plate
The UK’s lead negotiator David Frost met his European counterpart Michel Barnier on Sunday, as they continued to try to thrash out a deal ahead of the end of the transition period - 31 December at 23 pm GMT.
Otherwise, trade between the EU and London will be conducted under World Trade Organisation (WTO) rules, which mean tariffs and quotas, with serious consequences for the economy.
Meanwhile a host of the UK’s European neighbours banned travel from the country in the wake of the spread of a variant of coronavirus that is spreading rapidly across the UK.
The EU is planning a crisis meeting on the subject on Monday almost putting Brexit on the back burner.
Fishing for a deal
The issue of fishing, despite only accounting for a tiny fraction of GDP for the UK, has long been a symbolic issue for both sides.
For some EU members, such as France and the Netherlands, it is an important political and economic issue.
For the Brexit supporters in the UK, control of its waters symbolises regained British sovereignty.
Negotiations focus on the sharing of the approximately €650 million of products fished each year by the EU in British waters and the length of the adjustment period for European fishermen.
For the British, fisheries products in European waters account for around €110m.
Brussels is reportedly proposing to give up about 20 per cent of the €650 million after a 7-year transition period, with London claiming 60 per cent over a 3-year period, according to EU sources.
Beyond this transition, the EU wants to be able to tax certain British products, particularly fisheries products, to compensate for any losses to its fishermen.
On the other two difficult issues - how to settle disputes and safeguards against unfair competition - positions have moved closer together in the past week, although the debate remains open.
Europeans are calling for guarantees in London to protect their huge market from the risk of environmental, labour or tax dumping.
They also want to ensure that the UK will not subsidise its economy at all costs, a point on which both sides are struggling to reach a compromise.