City of London figures have expressed concern about the increasing likelihood of the UK leaving the post-Brexit transition period without a deal.
The latest round of talks wrapped up today, with both sides saying no serious progress was made on the most contentious issues.
The two largest areas of contention are still EU fishing access to UK waters and business competition regulations known as the level playing field.
The UK will leave the EU single market and customs union on 31 December, with or without a deal.
UK chief negotiator David Frost said he still believed a deal could be done by September, but that “considerable gaps remain in the most difficult areas”.
EU chief negotiator Michel Barnier went as far as to say that a deal was now “unlikely” without serious compromises.
Barnier’s comments sparked concern in some corners of the Square Mile.
Alex Altmann, partner at accountancy and business advisory firm firm Blick Rothernberg, said the UK was at risk of “losing its competitive advantage as a European trading hub”.
“We already know that UK exporters will be hit with a cost shock selling goods into the EU due to new border requirements,” he said.
“But if tariffs and quotas come on top the UK will become a very unattractive place for global companies to make business in Europe.”
Andrew Duncan, chief executive of management consultancy firm Infosys, added: “The economically disruptive ‘cliff-edge’ outcome of a no-deal Brexit still remains possible, and sterling would almost certainly depreciate sharply again.
“Such an outcome will significantly extend the post-crisis recovery in GDP growth that we were hoping for in 2021 and beyond.”
Trade barriers between the EU and UK will be immediately erected in the form of tariffs and quotas if no deal is struck by the end of the year.
The City of London can still retain access to EU markets if the UK is granted regulatory equivalency by Brussels, which is separate from the trade negotiations.
Iain Anderson, executive chairman of City of London communications group Cicero/AMO, said the process had been a “roller coaster”, but that he still thought a deal would get done.
“I’m sticking to with my feeling that there is a deal to be done – not a comprehensive trade deal, but a framework deal,” he said.
He added: “All City eyes will be on ensuring things like data sharing and contract continuity are sorted and that there is a bridge on these issues.
“Most of the people who I speak to already made preparations for the UK’s exit from the single market last year.”