British Prime Minister Theresa May said on Monday her government was working “extremely hard” to save a Brexit deal that continued slipping out of grasp despite frantic negotiations with the European Union.
May spoke to leaders of London’s City financial district with anxiety mounting over the doomsday possibility of Britain crashing out of the 27-nation bloc in March without an agreement.
The British prime minister hopes to seal divorce terms that can maintain frictionless trade—and assure there is no panic on the markets—by the end of November. But the latest in a series of crunch meetings between top negotiators in Brussels on Sunday broke up without a breakthrough a few hours after midnight.
“The negotiations for our departure are now in the endgame,” May’s office quoted her as telling a reception in the heart of London’s financial district. “And we are working extremely hard, through the night, to make progress on the remaining issues in the withdrawal agreement, which are significant.”
A U.K. government source said a deal must happen by Wednesday if there is any hope of an extraordinary E.U. summit this month to sign the withdrawal agreement.
The crisis could otherwise drag on until a regular E.U. summit on Dec. 13.
This would dramatically curtail the time May will have to get any agreement past a rebellious British parliament before Brexit day on Mar. 29.
The pound dropped to 1.285 dollars from Friday’s close of 1.297 on fears of the saga ending in a messy divorce that fails to establish short-term trading rules between one of Europe’s biggest economies and the rest of the bloc.
The talks are stuck on the question of a “backstop” arrangement to prevent the return of border checks between British Northern Ireland and E.U. member Ireland if the sides fail to agree a free trade pact. “Some key issues remain under discussion, in particular a solution to avoid a hard border between Ireland and Northern Ireland,” the European Commission said Monday.
The Financial Times briefly lifted markets by reporting Monday that chief E.U. negotiator Michel Barnier told European ministers that the outlines of a deal were now “very largely defined.” But both British and E.U. officials took pains to quickly play down the report.
Irish Foreign Minister Simon Coveney saw no substantive progress after meeting Barnier. “The two teams have really intensified their engagement,” Coveney said Monday. “We’ll have to wait to see where that goes. The issues aren’t new. We need to give the teams the time and space now.”
Britain’s latest concerns are focused on how it might be able to exit the “backstop” arrangement and start negotiating its own trade deals. But signs last week that the sides were nearing a compromise looked far less promising after May came under attack from key British players for giving away too much ground.
May’s Northern Irish allies in the Democratic Unionist Party—a group of 10 M.P.s that props up her government—and Eurosceptics in her own party accuse the prime minister of negotiating away Britain’s sovereignty. Their main fear is that Northern Ireland will be left partially under E.U. regulation after the rest of Britain breaks free.
May appeared to be addressing those fears by telling City officials on Monday that there “will not be an agreement at any cost.”
May will host a weekly cabinet meeting on Tuesday that she had initially hoped would sign off on a deal struck over the weekend with the E.U. But a British source said Monday there was “no agreement for them to discuss” Brexit after the talks fell through.
The deal is meant to finalize Britain’s exit bill of around £39 billion. It must also guarantee citizens’ rights and launch a 21-month transition during which London will follow E.U. rules.
British and European negotiators will launch more ambitious talks during this transition period on future trading and legal relationship. But May is facing increasing pressure from all sides in her Conservative party over the mooted plan.
Eurosceptics have long warned against staying too close to the Brussels. There are also growing indications that pro-Europeans are gearing up to block the Brexit deal and seek a brand new referendum on the country’s future course.