EU and UK have made no progress in Brexit talks, Germany warns

The European Union and U.K. have made “no real progress” in negotiations on a free-trade pact and the British government must show more flexibility for a breakthrough to be reached, Germany’s ambassador to the EU said.

“Is a deal possible? Yes, definitely,” Michael Clauss told an online event on Thursday organized by the Brussels-based European Policy Centre. “But I think it also means that the U.K. needs to have a more realistic approach. To put it short: I think we cannot have full sovereignty and at the same time full access to the internal market.”

He also reiterated the need to reach a free-trade pact this year because the U.K. seems unlikely to request a prolongation of the post-Brexit transition period.

Under the terms of the U.K.’s withdrawal from the EU earlier this year, a transition period preserving the economic status quo runs until the end of 2020 and can be prolonged by as long as two years while both sides negotiate a free-trade deal. A decision to prolong the transition phase—something U.K. Prime Minister Boris Johnson has ruled out—would have to be taken by the middle of this year.

Failure to strike an accord by Dec. 31 would mean the return of tariffs and quotas as well as the imposition of bureaucratic barriers for businesses. Aviation, counter-terrorism cooperation and arrangements for people living and working in each other’s countries all risk being left in limbo.

“This is a must-do,” Clauss said. “We work under the assumption the United Kingdom is not going to ask for an extension. That means a deal needs to be struck in the next six months.”