Britain to resume trade talks with EU amid signs of progress

The U.K. and the European Union will resume talks over a post-Brexit trade deal, less than a week after Boris Johnson suspended the discussions, amid growing signs an accord is in sight.

Negotiators will arrive in London on Thursday to begin intensive daily discussions, Britain’s chief negotiator, David Frost, tweeted. The aim is to reach an agreement by the middle of November, officials said.

The announcement put the pound on course for its largest daily gain since March, while the yield on 10-year gilts rose five basis points to 0.24%.

The diplomats are aiming to strike a deal within three weeks to leave time for it to be implemented before Britain’s departure from the EU’s single market and customs union on Dec. 31. Without an agreement, businesses and consumers will be hit with costs and disruption as tariffs and quotas are reimposed.

While officials on both sides warn substantial differences still have to be overcome, they said there are signs of progress.

In a joint set of principles governing the talks published on Wednesday, the U.K. and EU agreed to negotiate on all outstanding issues concurrently and to set up a “small joint secretariat” to work on a consolidated draft of the accord.

Johnson’s Move

Together, those changes remove a major bottleneck and mark a key breakthrough, something the British had been seeking for weeks. They are also a sign that both sides are starting to agree on common solutions.

Johnson triggered the hiatus on Friday, frustrated at the EU’s unwillingness to work on a legal text, and what he said was its refusal to recognize Britain’s sovereignty, or accept that it would need to compromise.

While EU officials described his decision to walk away as a theatrical gesture, they viewed it as a necessary step for Johnson to be able to sell a compromise to euro-skeptics at home.

On Wednesday, the EU’s chief negotiator, Michel Barnier, moved to address Johnson’s complaints, telling lawmakers in Brussels the EU would acknowledge Britain’s sovereignty, change its negotiating approach, and begin work on the text. Later in the day, he and Frost held a call paving the way for the discussions to resume.

“On the basis of that conversation we are ready to welcome the EU team to London,” Downing Street said in a statement. Even so, “it is clear that significant gaps remain between our positions in the most difficult areas, but we are ready, with the EU, to see if it is possible to bridge them in intensive talks.”

The two biggest roadblocks remain the level competitive playing field and access to British fishing waters. On the former, the EU wants the U.K. to offer concessions, especially on its state aid policy. Johnson needs the EU to soften its demand for the same access to British fishing waters its boats enjoy today.

“Hard work needed,” European Commission President Ursula von der Leyen said in a tweet. “No time to lose.”