EU warns no deal is likeliest outcome of talks

European Commission President Ursula von der Leyen warned that a no-deal split with the U.K. is the likeliest outcome on Dec. 31 as last-ditch talks to try to reach a deal before Sunday continue in Brussels.

Prime Minister Boris Johnson’s pleas for European Union leaders to step in and salvage the faltering trade negotiations were frustrated as summit talks overran on Thursday night, pushing Brexit to the fringes. On Friday, von der Leyen spent just 10 minutes briefing government leaders on the subject.

On Thursday, Johnson warned U.K. businesses and the public to prepare for the “strong possibility” of a no-deal split. Both sides have said they will continue discussions until Sunday, but officials concede that, without fresh political direction, the negotiating teams will have little to talk about.

Key Developments:

• EU leaders briefed on talks, told no-deal is “likeliest outcome”
• The pound fell to a near four-week low against the dollar
• Labour says Johnson has “lost the plot” in the talks

Macron: We’re Still Looking for Deal (10:50 a.m.)

Emmanuel Macron said, amid “rumors, fire and counter-fires,” he still wants a deal that “respects our British friends.”

The French president dodged a question on whether his wish to see French fishermen continuing to fish in U.K. waters after a no deal was an attempt to “have his cake and eat it too”—an expression used by Johnson in describing his own views on Brexit.

“I am asking for the butter to be well weighed, because I am not giving up my share too,” Macron responded, repeating that the EU had “one principle: standing united.”

Von der Leyen Stresses U.K. Sovereignty (10:25 a.m.)

Ursula von der Leyen used her press conference after the EU summit to focus on the bloc’s negotiating positions rather than warn they’re heading for no deal, a sign perhaps that they’re not quite at the end of the road yet.

On the so-called level playing field for fair competition—the biggest obstacle to an agreement—she emphasized British “sovereignty,” the key U.K. demand.

Under the EU’s proposal rejected by Johnson’s government, “the U.K. would remain free—sovereign if you wish—to decide what they want to do,” she said. “We would adapt the conditions for access to our market according to the decision of the U.K. and this would apply vice-versa.”

She also indicated it may not be a clear deal or no deal at the weekend. “We will decide on Sunday whether we have conditions for an agreement or not,” she said.

U.K. Slow to Recognize Trade-Offs (9:30 a.m.)

David Lidington, who served as Prime Minister Theresa May’s de facto deputy, said the U.K. has been slow to recognize and explain that any deal will require trade-offs.

“We are wanting privileged access—tariff-free, quota-free—to this very important market of the EU, by far our biggest trading partner anywhere in the world, and they are going to demand a price,” he told Bloomberg Television’s Francine Lacqua.

Lidington said he hoped Johnson will strike a deal and that, if the prime minister did secure one, he would be able to get parliamentary approval for it.

BOE Warns of Possible Disruption (9:12 a.m.)

The Bank of England said it can’t rule out market volatility or some disruption to financial services in the event of a no-deal Brexit, but said Britain’s banks are strong enough to weather such an outcome.

Speaking after the BOE published its latest health check of the banking system, Governor Andrew Bailey said the institution had done a huge amount of work to prepare for any form of Brexit. But he cautioned that the EU hadn’t matched those preparations in every respect.

Von der Leyen: No-Deal More Likely (8:30 a.m.)

European Commission President Ursula von der Leyen, who met Johnson on Wednesday, told the summit of EU leaders that no deal is now the more likely option, according to two European officials.

In a 10-minute briefing to the 27 leaders, she told them the main obstacles remain in the talks.

Read more: Johnson Appeal for Brexit Help Frustrated by Summit Deadlock

Deal, But Not at Any Price, Dowden Says (8:05 a.m.)

“We would much prefer a Canada-style deal and that is what we have been working towards, but this can’t be at any price,” Culture Secretary Oliver Dowden told the BBC.

“What we will not accept is this ratcheting up—that if the EU decides to impose fresh regulations that have nothing to do with us, we have to then match them or face the consequences—they don’t demand that of Canada.”

The Australia, Canada Models for Post-Brexit Trade: QuickTake

Brexit Road Testing Starts (7:25 a.m.)

Part of the main motorway to Dover and the Channel Tunnel will be closed overnight on Friday as officials install a new movable barrier.

The contraflow system is designed keep traffic flowing in the event of Brexit-related disruption.

Johnson has “Lost the Plot,” Labour Says (7:10 a.m.)

Lisa Nandy, foreign affairs spokeswoman for the U.K.’s opposition Labour Party, said Johnson’s government has “lost the plot” over the Brexit talks and urged the prime minister to agree a deal with the EU.

“The government’s position is now that it’s intolerable to accept tariffs and quotas, so they want to leave on terms that immediately introduce tariffs and quotas,” Nandy told BBC Radio. “It just seems absolutely absurd.”