UK and EU negotiators have restarted talks over a post-Brexit trade deal in hope of securing an agreement.
It comes after the two sides confirmed on Sunday there had been enough progress for negotiations to continue.
EU Commission President Ursula von der Leyen said on Monday there had been “movement” in the talks and negotiators had not exhausted all options.
But a UK government source later said there had not been “significant progress in recent days”.
Time is fast running out to finalise an agreement before the UK’s Brexit transition ends in just over two weeks.
The decision to keep talking came after UK Prime Minister Boris Johnson discussed the main sticking points with President Von der Leyen on Sunday.
Negotiations will continue in Brussels on Tuesday, but a new deadline for a decision has not been set.
The ultimate deadline comes on 31 December, however, when the UK stops following EU trading rules.
Without a trade deal in place by then, the two sides would begin trading on World Trade Organization (WTO) terms, meaning taxes – or tariffs – would be introduced, potentially raising the cost of imported goods such as food.
Fishing rights, “level playing field” rules on how far the UK should be able to diverge from EU laws, and how any agreement should be policed remain the major stumbling blocks.
The EU’s chief negotiator Michel Barnier has resumed talks with his UK counterpart Lord Frost, after briefing ambassadors of EU member states.
According to an EU source, Mr Barnier is believed to have told them talks over a level playing field remained hard, but were moving towards an agreement.
He is also said to have told them a wider deal could fall into place if a route towards an agreement on fishing rights can be identified.
But a UK government source later downplayed progress, saying: “Talks remain difficult and we have not made significant progress in recent days, despite efforts by the UK side to bring energy and ideas to the process.”
Speaking at an event on Monday, Mrs von der Leyen said the issue of the level playing field was the “one and only important question” if UK should continue to have access to the EU’s single market.
The EU Commission president added: “They have either to play by our rules, because this is a matter of fairness for our companies… or the other choice is there is a price on it, and the price is border and tariffs.”
Labour’s shadow Cabinet Office minister Rachel Reeves welcomed the continuation of the talks and said the worst outcome would be to “crash out with no deal whatsoever on 1 January”.
- Brexit happened but rules didn’t change at once: The UK left the European Union on 31 January 2020, but leaders needed time to negotiate a deal for life afterwards – they got 11 months.
- Talks are happening: The UK and the EU have until 31 December 2020 to agree a trade deal as well as other things, such as fishing rights.
- If there is no deal: Border checks and taxes will be introduced for goods travelling between the UK and the EU. But deal or no deal, we will still see changes.
This new phase of the talks is expected to focus on how close the UK should stick to EU economic rules in the future.
The EU is determined to prevent the UK from gaining what it sees as an unfair advantage of having tariff-free access to its markets – not paying taxes on goods being bought and sold – while setting its own standards on products, employment rights and business subsidies.
The EU is reported to have dropped the idea of a formal mechanism to ensure both sides keep up with each other’s standards and is now prepared to accept UK divergence – provided there are safeguards to prevent unfair competition.
Fishing rights is another major area of disagreement, with the EU warning that without access to UK waters for EU fleets, UK fishermen will no longer get special access to EU markets to sell their goods.
But the UK argues that what goes on in its own waters, and its wider business rules, should be under its control as a sovereign country.
What does it mean in Brexit trade deal terms “to go the extra mile”?
That’s the distance the UK Prime Minister, Boris Johnson, and the European Commission chief, Ursula von der Leyen, have promised to travel over the next days.
But will the road take them to deal or no-deal? And who will compromise on what to get there?
EU contacts close to the talks say both sides are being constructive. They insist negotiations aren’t simply continuing because neither the EU, nor the government want to be blamed in a no-deal scenario and prefer not to walk away first.
Remember: what’s said in front of the cameras is only part of the picture.
We aren’t behind the scenes in the negotiating room or on the closed calls between Mr Johnson and Ms von der Leyen.
But however long these talks rumble on, ultimately neither the government, nor the EU, will sign up to a deal if they can’t claim it as a victory.
The National Farmers’ Union has warned there will be “significant disruption” to the sector if the UK fails to reach a trade deal with the EU.
And the British Retail Consortium warned the public would face “over £3bn in food tariffs [meaning] retailers would have no choice but to pass on some of these additional costs to their customers”.