Both sides will suffer economically from a failure to secure a trade deal, but most economists think the British economy would take a greater hit.
Leaders and negotiators from the European Union and the United Kingdom have intensified their struggle to get a trade deal past the New Year's Day finish line.
EU nations are also looking at legal options to do it without formal European Parliament backing.
“We are really in a crucial moment and we are giving it a final push," said EU chief negotiator Michel Barnier on Tuesday.
Nine months of talks have dwindled to just a few days to find a compromise on how to continue trading with as few obstructions and tariffs as possible after Britain left the EU on Jan. 31 and a transition period runs out at the end of the year.
“In 10 days, the UK will leave the single market," Barnier said, highlighting the need for speed to get a deal.
Over the past few days, British Prime Minister Boris Johnson and EU Commission President Ursula von der Leyen have been drawn more and more into the talks and have been in contact by phone seeking to unblock negotiations on the last major outstanding difference –– EU fishing rights in UK waters.
Up to Jan. 1, the rights were shared among all EU nations, but with the Brexit departure, the United Kingdom regains control over some of its abundant waters.
Now both sides are haggling, seeking to hog as much of those fishing quotas as they can. If Britain insists on keeping too much for itself, it could see itself punished with tough seafood export tariffs and other measures.
Officials said the EU could live with a cut of up to 25 percent in quotas while Britain wants it to be much more. The sides are also bickering over a transition period, which Johnson wants to limit to three years while the EU is pushing for seven.
Not enough time
The EU legislature says the drawn-out negotiations have left lawmakers without enough time to approve a deal by Jan. 1 and legal intricacies are now being explored to see if any deal could still come into force on Jan. 1, while the European Parliament approves it later.
On Monday, Johnson insisted it didn't really matter whether an agreement is reached or not, saying Britain would “prosper mightily” even if the talks collapsed overnight.
Hundreds of thousands of jobs are at stake throughout the economies of both sides if no deal is found, but Britain is still insisting its sovereignty trumps concessions granting EU vessels rights in UK waters, and the EU is refusing to open its lucrative single market to the UK unless it commits to playing by EU rules.
The stalemate has left the overall talks inconclusive, with businesses on both sides clamouring for a deal that would save tens of billions in costs.
A failure to reach a post-Brexit deal would lead to more chaos on Britain’s borders with the EU at the start of 2021, when new tariffs would add to other impediments to trade enacted by both sides.
While both sides would suffer economically from a failure to secure a trade deal, most economists think the British economy would take a greater hit, at least in the near-term, as it is relatively more reliant on trade with the EU than vice versa.