The penultimate round of negotiations between the UK and EU have become increasingly heated, amid reports of waning trust and growing fears the UK could walk away from the talks.

Relations have become strained after the government confirmed it will look to “modify and disapply” parts of the Withdrawal Agreement through new legislation for the UK internal market.

However, the BBC has reported today (11 September) that talks will resume on Monday, despite the rising tensions.

Legal action

European Commission President Ursula von der Leyen condemned the Internal Market Bill, saying it “would break international law and undermines trust”.

The FT reported yesterday that the EU has threatened the UK with legal action - which could result in fines - if it does not withdraw the parts of the bill breaching the Withdrawal Agreement in "the shortest time possible and in any case by the end of the month”. 

Emergency meeting

EU vice-president Maroš Šefčovič held an emergency meeting on Thursday afternoon with Michael Gove – the minister leading the UK’s post-transition preparations.

The two have regularly met through the EU-UK Joint Committee which convenes to discuss the interpretation and application of the Withdrawal Agreement.

The UK has admitted it will breach that agreement in relation to two key areas of the Northern Ireland Protocol – subsidies and customs obligations for Northern Irish firms.

"I came here to express the serious concerns the EU has over the proposed bill," Šefčovič told the BBC ahead of the meeting.

Chief negotiators Michel Barnier and Lord David Frost have also met this week.

Subsidy announcement

As well as the contentious Internal Market Bill, the UK also announced this week that it will adopt WTO subsidy rules from the start of next year.

Negotiations over level playing field rules for state aid has been one of the long running sagas in the negotiations.

“WTO rules are an internationally recognised common standard covering financial assistance granted by governments and public authorities to companies,” the government statement said.

“Unlike EU member states, most advanced economies do not have substantive rules regulating subsidies beyond those set by the WTO.”