LONDON, Oct. 16 (Xinhua) -- In September, British Prime Minister Boris Johnson set Oct. 15 as the deadline for a Brexit deal, warning if a deal wasn't reached by then he doesn't "see that there will be a free trade agreement" between the European Union (EU) and Britain.

As the European Summit concluded in Brussels Friday, a deal has not been sealed. Still, observers believe a deal might be within reach with only 10 weeks to go until the end of the transition period due on Dec. 31.

READY FOR NO DEAL?

On Friday, Johnson said Britain should "get ready" for the prospect of no free trade deal with the EU, but he also suggested he is not completely walking away from negotiations.

"What we're saying to them is come here, come to us, if there's some fundamental change of approach," he said.

Instead of "accepting and moving on", Britain and the EU have indicated that they want to carry on negotiations, said Rajneesh Narula, the John H. Dunning Chair of International Business Regulation at the Henley Business School, University of Reading.

This back and forth between the sides is relatively normal in high-level negotiations when politics is at stake, Narula told Xinhua in a recent interview. "It can be normal for both sides to kind of sound pessimistic and try and push the other partner to act."

The fact that Britain is prepared to continue talks, despite missing the October deadline to reach a deal, suggested to Narula that Johnson feels he "does need a deal".

Adding to the concerns are the hit that coronavirus has had on the British economy and its forecast for next year, Narula said that he still believes that Johnson will look for a deal.

"COVID-19 will take 10 percent of GDP (gross domestic product) this year and next year. And if you throw in very hard Brexit, you're taking up another 5 to 6 percent so this is doubling the pain," Narula said.

According to the Paris-based Organisation for Economic Co-operation and Development (OECD), Britain's GDP is already on course to shrink by more than 10 percent this year and only partially recover its losses in 2021.

"Especially for the manufacturing industry, which they're very keen on reviving. The food industry, the manufacturing industry are going to be hit really hard, no matter," Narula added.

Narula, an economist and academic, has focused his research and consulting on the role of multinational firms in development, innovation and industrial policy, technological change in developing countries, R&D alliances and outsourcing. Much of his research is focused on policy-related issues.

STICKING POINTS

Both London and Brussels are calling on each other to compromise on key issues, including fishing and limits on government subsidies to businesses.

They are seeking an agreement to govern their trading relationship once the transition period ends by the end of December.

One major sticking point in the talks is the Britain-EU fishing dilemma, which largely concerns French President Emmanuel Macron and Johnson.

For Narula, it is more "symbolic" and should be less complicated than widely anticipated.

"There is a way forward and it isn't that complicated. And fishing isn't that important in the big scheme of things for either side. I think the other two issues that matter more for the European side is the need for a level playing field. And this comes back to the issue of the Withdrawal Agreement," Narula said, adding that the EU will be watching any U.S.-Britain trade deal closely to see how it could impact their own markets.

"If the UK signs a deal with the U.S. on say, chlorinated chicken and allows chlorinated chicken, and if there aren't any checks, these chlorinated chicken will end up in the European market, which will create its own set of problems," he said.

"If there's a kind of competition in terms of taxes and terms of diverging standard in products, this will then affect all forms of trade... So they (the EU) want to prevent the UK from being a direct competitor in terms of trying to lower standards and so forth," he said.

TEST FOR EU UNITY

These negotiations have been as much about Brexit as they have been about testing the unity of the EU, Narula said.

Leaders like Macron and German Chancellor Angela Merkel are keen to act in unison to show domestic voters that the Union is a working, ticking machine.

"At this point, especially with COVID-19, you know, as being such a big deal, nobody wants to look like they're breaking ranks, and nobody will break rank," he said.

Merkel on Friday called on Johnson to keep negotiating over Brexit, saying the EU will need to compromise.

"I think if Merkel okays whatever deal comes out, I think nobody else will stand in the way so I'm not expecting any trouble," he said.

Trouble, instead, may fall to Johnson as he has a number of different bases within his own party to satisfy.

"If he does go for a softer Brexit, and he does give in to some of these things the EU demand, then he has to deal with the ERG (European Research Group in parliament) and Northern Ireland's DUP (the Democratic Unionist Party), Narula said. "That is the bigger problem. It isn't about breaking ranks within Europe."

Johnson on Friday told British businesses to prepare for the likelihood of a no deal Brexit, many experts are still within belief that the two sides are close enough to a deal.

"It can be done in the next three weeks with a little give and a little less pride," Narula said. Enditem

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