Ursula von der Leyen took personal control of Brexit negotiations in an attempt to strike a deal before Christmas as talks went to the wire over tens of millions of pounds worth of fish.
The European commission president is understood to be in constant contact through a series of unscheduled phone calls with Boris Johnson and the EU capitals as she battles to find a compromise.
Speaking to EU ambassadors on Tuesday afternoon, the bloc’s chief negotiator, Michel Barnier, said there was progress but that he had rejected the latest offer from the prime minister’s chief negotiator, David Frost.
The EU has said it is willing to lose 25% by value of the fish its fleets catch in UK waters. The UK has proposed the repatriation of 35% – a potential difference of €63.8m (£58.1m).
However, Barnier said the British offer did not include pelagic fish such as anchovies, tuna and mackerel, meaning the loss of annual income would be closer to €230m a year.
The UK’s Office for Budget Responsibility warned last month that failing to secure a trade and security deal after nine months of talks would cost 300,000 jobs next year and cut 2% off GDP, equivalent to £40bn a year.
Barnier said there was “political willing on both sides to get this over the line”, adding that “some things now have to go higher up”, according to one source in the room.
Von der Leyen has encouraged the big fishing nations to move closer to the British offer. France and Denmark are understood to be the most cautious about making a counter-proposal.
The Danish ambassador told Barnier that the EU should stick with its final offer. The EU negotiator did not respond. France’s representative highlighted the political sensitivity of the issue for its coastal communities.
Von der Leyen spoke by telephone to Johnson on Monday night to discuss a way forward and further calls are expected in the next 24 hours, but the commission refused to offer details.
Barnier said as he went into a meeting with EU ambassadors: “We are really in the crucial moment. We are giving it the final push. In 10 days the UK will leave the single market and we continue to work in total transparency with the member states right now and with the parliament.”
A senior EU diplomat said a deal was within reach. “Progress has been made,” they said. “Most issues are preliminarily closed or close to being agreed. However, differences on fisheries remain difficult to bridge. Unfortunately the UK is not moving enough yet to clinch a fair deal on fisheries.
“EU negotiators are in a last push now to make progress and to clinch a deal acceptable for both sides. The EU will not close its door to the UK and remains ready to negotiate even beyond 1 January.”
Johnson has suggested a five-year phase-in period for the new arrangements – up from his initial offer of three years – with a compromise also likely on the application of tariffs or export bans on goods where fishing access changes after the phase-in period. The EU wants at least six years of transition.
Under the UK proposals, where the quota share is reduced in the future, an independent arbitration panel will deduce the cost and allow either side to levy tariffs on goods or seek compensation.
According to sources briefed on the terms, there will also be a termination clause should the reduction in access be judged to be egregious, opening up a fresh negotiation on all aspects of the trade deal. UK sources declined to comment.
The former Tory leader Iain Duncan Smith said Brexiters were comfortable with a lengthy transition period to allow the UK fishing industry to build up capacity. But he said there should be no right for the EU to apply tariffs if the UK cut access to the European fleet in future.
He said: “The crucial issue is that the UK takes back control fully. After a transition the UK needs to be an independent coastal state in control of 100% of its fishing waters.
“Any idea that there would be a post-transition review would be utterly unacceptable. That would make a mockery of the slogan ‘take back control’. It would be instead another renegotiation.”
With the European parliament saying it is now too late for it to hold a vote of consent on any deal, the EU member states would probably seek to “provisionally apply” the deal on 1 January, with MEPs voting later in the month.
But this process also takes a number of days given the need for legal scrubbing, translation and scrutiny by the governments.
Should the talks go beyond 23 December, there may be an unavoidable period after 1 January where there is a no-deal outcome. Contingency measures could be negotiated to avoid the worst impacts but it would leave exporting businesses, ports and security services in a legal limbo.