LONDON, Sept 4 — Senior officials in British Prime Minister Boris Johnson’s office see only a 30 per cent-40 per cent chance that there will be a Brexit trade agreement with the European Union due to an impasse over state aid rules, The Times reported.

The United Kingdom left the EU on January 31, turning its back after 47 years on the post-World War Two project that sought to build the ruined nations of Europe into a global power.

The British exit followed more than three years of wrangling over an exit deal since the 2016 referendum that sent shockwaves through global financial markets. Since Brexit, talks on a new trade deal have so far made little headway.

Britain’s desire to use state aid to build up its technology sector means that Johnson’s top ministers are unwilling to budge in negotiations on state aid, The Times said.

"Inside No 10, they now think there is only a 30 to 40 per cent chance that there will be an agreement,” James Forsyth, political editor of The Spectator, wrote in a column. "The sticking point isn’t fish — I’m told that there is a ‘deal to be done’ there — but state aid.”

Talks on the trade deal are due to resume in London next week. The EU says Britain cannot retain all the economic and trading benefits it had as an EU member, while London says Brussels is not showing enough flexibility.

Failure to reach a trade deal would hammer financial markets as nearly a trillion dollars in trade, from car parts and medicines to lamb and fish, would be thrown into turmoil.

The UK wants the percentage of fish quotas reserved for UK vessels in British waters to increase from some 25 per cent now to more than 50 per cent, The Times said. — Reuters