Fishing boats moored at the port of Le Guilvinec, western France.

AFP via Getty Images

Negotiators from the European Union and the U.K. met for the second day on Friday, after deciding this week to resume their talks about a trade deal, following a few tense days. U.K. Prime Minister Boris Johnson had threatened last week to end the talks because EU leaders took a hard line after a summit meeting, demanding that London make “the necessary moves to make an agreement possible.”

  • A speech by EU chief negotiator Michel Barnier on Wednesday, calling on “both sides” to work “constructively” toward a compromise, was seized by the U.K. government as a sign of the gesture London wanted to see from the European side.

  • Barnier then had a one-hour phone conversation with his U.K. counterpart David Frost, and the two men agreed that negotiations will now take an intensive form with daily meetings, weekend included. The aim is to strike a deal in time for the parliaments to ratify it before Dec. 31.

  • No visible progress has been registered so far on the three contentious issues that have prevented a deal in the past months: access to British waters for European fishermen; the rules governing state aid in the future; and how to manage differences and legal disputes once the deal is implemented.

  • Emmanuel Macron has been secretly urging France’s fishing industry to brace for the impact of Brexit and prepare for a reduction of its catches in British territorial waters, Reuters wrote on Friday. That would mark a significant softening of the French president’s stance on the issue.

  • U.K. trade secretary Liz Truss, in Tokyo this week to sign a bilateral trade deal with Japan, said London wanted to sign “a good deal” with the EU. “We’re in intense negotiations (…) We’ve made real progress,” she told reporters.

  • The pound is up 0.5% against the euro since the news of the resumption of the talks. It is down 6% against the common currency since the beginning of the year.

The outlook: The U.K. climbdown doesn’t come as a surprise, and Barnier did the minimum that was expected to allow London to hail his statement as an olive branch. As the U.K. is struggling with a strong second spike of the COVID-19 pandemic, a ‘no-deal’ Brexit looks increasingly like an economic shock that must — and can — be prevented.

This can be achieved if the EU — notably France — accepts to move on fisheries, and the U.K. concedes it has to accept binding rules on state aid to industries. Negotiators seem to have reached the point where they think they can agree. But it will be up to governments to sanction the deal — or not.

Read: Boris Johnson tells media that the country would get ready for ‘no-deal’ Brexit from Jan. 1, unless EU changes its approach

Read: Theresa May cashes in with £1.45 million in speeches to Wall Street firms and U.S. universities

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