Brexit negotiations will resume in Brussels on Sunday after Boris Johnson and the European commission president, Ursula von der Leyen, agreed that a trade and security deal was still possible in the immediate days.
In a joint statement, the two leaders said they would talk again on Monday evening, with the two sides searching for a breakthrough with just three weeks until the UK leaves the single market and customs union.
“In a phone call today on the on-going negotiations between the European Union and the United Kingdom, we welcomed the fact that progress has been achieved in many areas,” they said. “Nevertheless, significant differences remain on three critical issues: level playing field, governance and fisheries. Both sides underlined that no agreement is feasible if these issues are not resolved.
“Whilst recognising the seriousness of these differences, we agreed that a further effort should be undertaken by our negotiating teams to assess whether they can be resolved. We are therefore instructing our chief negotiators to reconvene tomorrow in Brussels. We will speak again on Monday evening.”
The EU’s chief negotiator, Michel Barnier, tweeted: “We will see if there is a way forward. Work continues tomorrow.” Ireland’s taoiseach, Micheál Martin, pushed both sides to make the compromises necessary to find agreement. He tweeted: “I welcome the fact that negotiators will resume their discussions on an EU and UK trade deal in Brussels tomorrow. An agreement is in everyone’s best interests. Every effort should be made to reach a deal.”
Sources close to the negotiation said the situation was serious with the final political issues proving hard to solve.
David Frost, the UK’s chief negotiator, and Barnier had said on Friday that they would pause their negotiations in London having failed to find common ground.
There was no suggestion that a compromise had been found in the phone call, which ran for about 90 minutes, but sources on both side sounded optimistic that common ground could be found.
Leaving King’s Cross for Brussels on Saturday morning Barnier had told reporters: “We keep calm, as always, and if there is still a way, we will see.”
EU sources said the negotiations had now come down to big political decisions on the three contentious issues: fisheries, fair competition and dispute resolution. Every other part of the treaty, which is expected to run to more than 600 pages, is in order, it is understood.
The European commission president and the prime minister, who is at Chequers, started speaking on the phone shortly after 4.30pm. “The differences are real but they just need a bit more time,” one EU source said. “I can imagine they will continue talking to Tuesday.”
The government is due to table the finance bill, containing new clauses that override the withdrawal agreement, on Wednesday, a move that would effectively mark the end of talks.
But there is an expectation among senior diplomats that agreement should be found in time, with EU leaders then able to sign off on an agreement at a summit on Thursday.
The cautiously positive outlook in Brussels contrasts with the recent warnings from Downing Street that a deal is hanging in the balance, with the EU said to have suddenly hardened its positions.
UK sources on Saturday said Downing Street had hoped for more realism from the EU side after Barnier, was said to have tabled unacceptable proposals on Thursday.
It was claimed the proposals on domestic subsidy control and standards would effectively force Westminster to align with the EU rulebook.
Brussels was also said to have demanded a 10-year pause on any changes to fishing access for European fleets in the UK’s exclusive economic zone. Frost has offered a three-year transition period.
An EU official dismissed the claims. “It is a bit cheeky,” said one. “Our positions have been entirely clear from the start.” A second described the claims over a 10-year transition period as a “strawman”. “That isn’t a problem, there is a compromise to be found,” said one source from a fishing nation.
Despite a series of headlines blaming the French president, Emmanuel Macron, for upturning the negotiations over fishing rights, the issue is not the major obstacle to a successful negotiation, sources on both sides said.
The more difficult gap to bridge lies in the EU’s demand to be able to unilaterally hit back through tariffs or suspension of parts of the treaty if the government undercuts the bloc’s environmental, social and labour standards.
The EU also wants the owners of European businesses to be able to seek redress in UK courts should there be evidence that government subsidies have left them at a competitive disadvantage.
Source said the two sides had further locked horns over whether EU funds will be exempt from state aid rules and whether the UK or Brussels will authorise subsidies in Northern Ireland.
France’s European affairs minister, Clément Beaune, who last week suggested France could wield its veto if the terms brought back failed to meet expectations, was more placatory on Saturday.
He said: “We hope to have a deal. We are still trying to have one so there aren’t additional tensions, there aren’t customs duties and things like that, and so that notably for our fishermen there is access to British waters. It’s very important. But we won’t do a deal at any price.”
“We can talk, make compromises,” Beaune said, “but we will not say to our fishermen we’ve sacrificed you all for them. They will be defended to the last. We’ve been honest, transparent, that things won’t be the same after 1 January, but there is no reason for them to be somehow sacrificed or taken hostage by the negotiations.”
Johnson and Von der Leyen discussed how they may pink their red lines to find common ground on the “level playing field” provisions and suitable access for EU fishing boats to British waters at the end of the year.
In a joint statement on Friday evening, Frost and Barnier said they had not been able to come to terms on the final issues and that the historic trade and security negotiation would be paused.
“After one week of intense negotiations in London, the two chief negotiators agreed today that the conditions for an agreement are not met, due to significant divergences on level playing field, governance and fisheries,” Barnier and Frost said in their statement.
“On this basis, they agreed to pause the talks in order to brief their principals on the state of play of the negotiations. President von der Leyen and prime minister Johnson will discuss the state of play tomorrow afternoon.”
Von der Leyen, a former German defence minister, has been privately criticised by diplomats from some member states for her zeal in seeking a deal with the UK. It is feared in some EU capitals that, as with the German chancellor, Angela Merkel, the intention is to secure an agreement at any price, as one senior EU diplomat in Brussels described it.
Merkel’s spokesman urged both sides on Friday to look past their red lines to strike a deal.
Merkel’s spokesman, Steffen Seibert, said: “For the chancellor, and that hasn’t changed in recent weeks, the willingness to compromise is needed on both sides. If you want to have a deal then both sides need to move towards each other. Everybody has their principles, there are red lines, that’s clear, but there’s always room for compromise.”