"Disturbing" state of Brexit deadlock not broken, says Barnier as he confirms block on second phase of talks

Catherine Neilan
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The European Union's chief negotiator Michel Barnier has confirmed he will not recommend Brexit talks can move onto the second phase, to trade and transition, saying the "disturbing" state of deadlock remains.

Speaking at the end of the fifth round of talks, Barnier said it was "within our grasp within the next two months" but not in time for the next meeting of the European Council next week.

Talks were held "in a constructive spirit", he said, but "without any great steps forward". Still, "decisive" progress could be made in time for the next European Council meeting before Christmas, he said.

More talks in the next two months have been agreed.

Barnier's words sent the pound falling against the euro and dollar, as the prospect of a no deal appeared to grip markets.

As the press conference continued, sterling dropped more than 0.44 per cent against both currencies.

Brexit secretary David Davis was more upbeat, although even he acknowledged there was no way around the impasse currently.

Of the thorny divorce bill, Davis said: "In line with the process agreed at our last round of talks, we have undertaken a rigorous examination of the technical detail where we need to reach a shared view.

"This is not a process of agreeing specific commitments - we have been clear this can only come later. But it is an important step, so that when the time comes we will be able to reach a political agreement quickly and simply."

In response to a question about the growing possibility of no deal, Davis added: "The UK is planning for all outcomes. It's not what we seek but we are planning for everything. It's the duty of government to plan for all scenarios.

"When money needs to be spent, it will be spent when it needs to be spent. It will be done in the appropriate way at that time."

Barnier was less equivocal, saying no deal will be "a very bad deal", and repeated that he hoped the teams can find a way out of this deadlock.

But he reiterated the need to stick to "the right order", saying transition and trade could not be discussed all the while citizens' rights, the Irish border and the divorce bill were not agreed.

However asked about loosening his mandate in order to open up talks, Barnier added: "Slowly but surely, over the next few weeks, I will explore the way forward."