Westminster is keen to get a deal wrapped up before Britain leaves in March 2019 and Phase 2 talks are set to begin in December, but whispers from Brussels suggest this may not happen.
Although “internal preparatory discussions” have already begun for Phase 2 talks, an EU source told Politico that this should not be taken as a sign that negotiations will definitely move on before the end of the year.
The EU27 reportedly don’t think a trade deal is achievable and are prepared to continue negotiations into the transition period.
The UK will leave the European Union in March 2019 whether it agrees on a withdrawal deal or not.
And an EU diplomat told Politico it is “difficult to imagine that we can reach an agreement before 2019”.
Roderick Abbott, who worked for 30 years in the European Commission’s Trade department, said he had never seen such a deal negotiated and signed in such a short space of time.
He told Politico: “It would take at least two years.”
Yesterday Michel Barnier’s top advisor also said that the bloc is preparing for a no deal.
Speaking at a seminar at the Institute for Government think tank in London Stefaan De Rynck said: “There is a clear negative impact from no deal, I think that that is clear, for both sides but especially for the UK economy. But it is not a scenario people want to work towards.
“We are preparing for it, that is for sure, but it is not a scenario that we in the negotiation room want to bring in that negotiation room.”
Prime Minister Theresa May has said she believes the two sides will reach a deal but the UK must prepare for all eventualities.
Taoiseach Leo Varadkar spoke positively of negotiation progress at an EU summit in Brussels last week, but the key sticking points of Phase 1 talks, the Northern Ireland border and the UK divorce bill, are yet to be agreed upon.
EU leaders are demanded further concessions from Theresa May before they agree “sufficient progress” has been made before being able to progress to Phase 2.
Mr De Rynck said “sufficient progress is not far away” but the UK needs to address those issues to end the deadlock.
EU chief Brexit negotiator Mr Barnier has insisted that trade talks will run on beyond the two-year exit transition, and has revealed he will step down shortly after the UK’s official exit date in 2019.
In an interview with a group of European newspapers on Monday, Mr Barnier said talks on future trade arrangements would be very different from talks about a transition period.
He said: “[They] will be very different and will last several years. It is truly unique because instead of promoting regulatory convergence, it will aim to frame a difference.”
Earlier this month, European Council President Donald Tusk denied the other EU member states were preparing for a no deal outcome.
He said: “EU27 is not working on ‘no-deal’ scenario. We negotiate in good faith and hope for sufficient progress by December.”
At a Brexit Commons committee meeting this week, Brexit Secretary David Davis admitted that MPs may not get to vote on the final Brexit bill until after we leave the bloc.