Michael Gove has put the chances of a Brexit deal at 66% amid fresh optimism over a breakthrough on the dispute over state aid, one of the key sticking points in negotiations. The chancellor of the duchy of Lancaster said the high percentage chance of a deal “sounded about right” when pressed about the talks during a session of parliament’s Brexit select committee. But experts seized on remarks made by the UK negotiator Lord Frost at the same meeting over a potential state aid dispute resolution mechanism. “I imagine we will be as assiduous users of it [dispute resolution] as the EU will be,” Frost said. He declined to detail how this governance mechanism would work but the fact it was mentioned formally was seen as new. “This is a big shift,” said Sam Lowe, senior research fellow at the Centre for European Reform. The EU has been worried that the UK could achieve competitive advantage in future by pumping subsidies into failing companies but the UK had refused to share its own plans for subsidies post-Brexit, merely declaring the country would maintain a low-subsidy regime. “I think what Frost was saying was that the UK has accepted that state aid is going to be subject to dispute resolution. This is the opening we were looking for to pave the way for an agreement on enforceability,” he said. State aid has been identified repeatedly as one of the biggest stumbling blocks in trade negotiations by both sides, but in a further indication of a breakthrough Frost said this was no longer the case. “Fisheries is the most difficult issue remaining in my view, I think we’ve been clear about that but I would not want to suggest that any issue can’t be solved.” He told the committee he thought that a deal was “eminently achievable and could be achieved”, suggesting the prime minister’s deadline of 15 October could be broken if there was an outline deal visible by then. “My job is to get as far as we can before the 15th, and then I’ll have to advise the PM as to whether the conditions for an agreement, the basis for an agreement are in place at that point,” Frost said, indicating that 15 October was not a red line. The outspoken Brexit supporter and Conservative MP Peter Bone told Gove he was struck by what he said was the “optimistic mood about a comprehensive free trade agreement that is really good news for everyone”. The upbeat tone raised hopes that sufficient progress could be made to enter the “tunnel” phase of intense negotiations by the time EU leaders meet next week. Earlier the Irish foreign minister Simon Coveney warned that the EU’s Michel Barnier will not move Brexit talks into the tunnel phase unless he gets a “very clear signal” from the UK that it is “willing to show some flexibility and realism” in its approach to a deal. Boris Johnson spoke to the president of the European Council, Charles Michel, on Wednesday to outline the UK’s “commitment to get a deal” and “underline a deal was better for both sides”. Conspicuously, there was no mention of state aid but a reiteration that “significant areas of difference remain, particularly on fisheries”.
After the phone call Michel said in a tweet it was “time for the UK to put its cards on the table” over a post-Brexit trade deal.
Coveney told an Irish parliamentary committee on Wednesday that no one should be offended by the UK’s desire to drive a hard bargain, but its refusal to budge on state aid and fair competition rules was “very problematic” because it had agreed in detail to work at a solution when it signed the political declaration in January. “Michel Barnier has been very insistent on this. He is not going to move this process into a more intensive phase, which many people will describe as a tunnel, to try to close out through it the remaining issues unless he gets a very clear signal from the UK that they’re willing to show some flexibility and some realism around the need for fair and open competition between these two big economies,” said Coveney.
He said the finance bill, which is due to be published imminently, could unsettle or even collapse the talks. “If the finance bill is introduced with that provision in it [to give UK ministers unilateral powers in Northern Ireland], I think many in the EU will see that as an indication that the British government simply doesn’t want to deal because it would be a second piece of legislation designed to deliberately break the withdrawal agreement,” he told the Irish parliament’s European affairs committee.