Brexit: What is the big stumbling block to EU free trade deal? asks Peston

Trade talks between the UK and the EU have been in deadlock despite time running out to find a deal. Credit: PA

Here is the fundamental stumbling block to a free trade deal. And truthfully I am not sure how it can be sorted.

The EU wants the unilateral right to toughen up its labour laws, or environmental standards or other so-called level-playing-field rules.

Any such new rules would not automatically apply to the UK.

But the EU wants an arbitration mechanism to determine whether the change in rules would confer a competitive advantage to the UK.

And if the balance of competitive advantage tilted to the UK, the EU would want to allow the possibility of tariffs being imposed on relevant UK exports.

And the UK would have the symmetrical right if it so chose to toughen labour laws etc.

This is not an issue of sovereignty but of complexity and uncertainty for business.

And it is difficult to see how a UK government could agree to it.

To be clear, the UK has more-or-less agreed not to weaken its existing Labour, environmental and other level-playing-field rules.What is called "non-regression" is almost sorted. But the framework for capturing the risks to each side as their laws diverge is proving nightmarishly hard to agree.

This stuff is so complex that I honestly don't see how a deal can be done in the three weeks available, even if all the officials were to work through Christmas.

PS: The prime minister at PMQs has just confirmed this is indeed the substantial stumbling block.