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EU-UK transition deal will lead to goods-only agreement, say economists

By Hazel Davis

Reuters poll predicts a 'narrow trade deal' for the UK

A Reuters poll has found that two-thirds of economists believe a UK-EU transition deal will not be pushed beyond December. This, they predict, could lead to a goods-only agreement.

There is less than a year in which to reach an agreement and many experts are questioning the viability of the time frame. Negotiations on the UK’s future relationship with the EU are due to start in March.

“The UK government is unlikely to want to cross what appears to be such a major red line by agreeing an extension. Instead, the government will likely try and secure a narrow trade deal in areas where the UK’s economic interests are best served,” said Peter Dixon at Commerzbank, reported by Reuters.

EU officials have said that the bloc would not be giving any special treatment to the UK and access will be determined in the same vein as Japan and the United States. Britain's Brexit negotiator David Frost suggested that Brussels should offer a trade deal similar to that of Canada.

Michel Barnier has already rejected this and said that the EU was ready to "work very quickly with Britain on the basis of the political declaration, which was agreed with Boris Johnson. We stand ready to propose this agreement, if the UK wants it."

The poll found that the most likely future trading regime is an EU-UK free-trade agreement, followed by no deal and trading under World Trade Organization rules.

FURTHER READING: Britain and the EU may 'rip each other apart' over trade, says French foreign minister

FURTHER READING: Johnson signals hardline stance ahead of UK-EU trade talks

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