Boris Johnson is in Brussels for last-ditch talks with the European Commission’s top official aimed at breaking the deadlock in trade deal negotiations.
The Prime Minister and Ursula von der Leyen are having dinner with their chief negotiators Michel Barnier and Lord Frost as they race against the clock to secure an agreement.
Mr Johnson arrived at the Commission’s headquarters, The Berlaymont, on Wednesday evening after telling MPs that no prime minister could accept the demands the EU is making.
But he insisted a trade deal was still possible, despite there being just three weeks until the current transitional arrangements expire.
Mr Johnson and Mrs von der Leyen were to hold a short meeting at The Berlaymont before dinner with their chief negotiators and officials.
It is hoped the discussions could pave the way for fresh talks between Lord Frost and Mr Barnier in the coming days.
As the two leaders posed for the cameras ahead of the dinner, Mrs von der Leyen told Mr Johnson to keep his distance as they briefly took their face coverings off.
She then told the Prime Minister to put his mask back on, to which Mr Johnson responded: “You run a tight ship here, Ursula, and quite right too.”
Their meeting comes ahead of a European Council summit on Thursday where Mrs von der Leyen is expected to debrief the leaders of the 27 member countries on the state of play with the negotiations.
During Prime Minister’s Questions earlier on Wednesday, Mr Johnson set out the main problems he has with the EU’s position, although he said “a good deal is still there to be done”.
Negotiations have faltered on the issues of fishing rights, the “level playing field” measures aimed at preventing the UK undercutting the EU on standards and state subsidies, and the way that any deal would be governed.
The Prime Minister said: “Our friends in the EU are currently insisting that if they pass a new law in the future with which we in this country do not comply or don’t follow suit, then they want the automatic right to punish us and to retaliate.
“Secondly, they are saying that the UK should be the only country in the world not to have sovereign control over its fishing waters.
“I don’t believe that those are terms that any prime minister of this country should accept.”
He again insisted the UK would “prosper mightily” with or without a deal – a claim which has been disputed by economic experts including the Office for Budget Responsibility and the governor of the Bank of England.
Failure to reach agreement would see tariffs imposed on UK exports to the EU, the country’s biggest trading partner, and could also increase bureaucracy.
The Office for Budget Responsibility has suggested that a no-deal outcome could wipe 2% off gross domestic product, a measure of the size of the economy, in 2021.
The Bank’s governor Andrew Bailey has warned that the long-term damage caused by a no-deal situation would be worse than the economic hit from coronavirus.
Mr Johnson’s press secretary Allegra Stratton told reporters: “The Prime Minister is going to be clear this evening that he cannot accept anything that undermines our ability to control our laws or control our waters.
“He is going to put that clearly to von der Leyen and see what her response is.”
The dinner comes amid a backdrop of pessimism from both sides, with UK sources acknowledging “an agreement may not be possible”.
And the EU’s negotiator Mr Barnier has warned the bloc’s foreign ministers that a no-deal scenario is more likely than an agreement.
But Cabinet Office Minister Michael Gove suggested there could be a limited compromise over fishing rights, with the UK prepared to be “very generous” in the way changes are phased in.
Yet he also told BBC Radio 4’s Today: “What is not up for compromise is the principle that the UK will be an independent coastal state and it will be a matter for negotiation between the UK and the EU, with the UK in control of our waters.”
German chancellor Angela Merkel stressed the importance of the “level playing field” to protect the EU’s single market – the rules governing trade in the bloc.
She told the parliament in Berlin: “We must have a level playing field not just for today, but we must have one for tomorrow or the day after, and to do this we must have agreements on how one can react if the other changes their legal situation.
“Otherwise there will be unfair competitive conditions that we cannot ask of our companies.”
Meanwhile, traders were hedging their bets that a Brexit deal could finally be signed, with the pound rising just 0.26% against the dollar. It was also up 0.47% against the euro as markets closed for the day.
Neil Wilson, financial analyst at Markets.com, said: “This only shows that traders think both outcomes – deal or no-deal – are still very much in the running.
“We await signals from the dinner between Boris Johnson and Ursula von der Leyen this evening.”