So can a deal be reached between the EU and UK by Sunday, despite the pervading mood of gloom plus a sense – in public at least – that both sides are digging in their heels? It’s difficult but possible #Brexit /1

Today the European Commission chief hit back at the EU-is-in-denial-about-UK-sovereignty claim.Yes, she said, EU was insisting on what it views as ‘fair competition’ rules in exchange for giving the UK preferential access to the single market (tariff +quota free) but she added/2

that UK would remain free – “sovereign, if you wish” were the words she used – to decide what it wanted to do. If UK diverged the EU "would simply adapt conditions for access to our market. It would be the decision of the UK and would apply vice versa,” she said /3

Is this a change in the EU position? I'd argue no. The EU has gradually shifted focus as it has become increasingly aware that post-Brexit UK will want to make up its own rules and regulations for business; deciding for itself which industries it wants to invest in and promote /4

Despite this, EU would rather have a trade + security deal with UK than not. So Brussels has been pondering how it can live with UK’s sovereign right to diverge, protect single market and still have a deal. Answer: focus more on governance, not just level playing field /5

NEW: Notes of careful optimism in EU off-record briefings .. Not just the public ‘maybe, possibly, but let’s see’ of the European Commission President in front of the European Parliament this morning /1

EU sources saying U.K. has accepted the idea of ‘managed divergence’ in exchange for preferential access to single market. Ie if U.K. divergences from EU standards (which U.K. gov demands as its post #Brexit ‘sovereign right’) then EU has right to retaliate eg with tariffs /2

Obvs right to retaliate would go both ways eg if U.K. views EU businesses as having unfair advantage after Brussels changed standards. Still to be agreed: what mechanism to judge whether unfair advantage exists or not.. EU has accepted it can’t take unilateral action /3

The above +more bilateral shifting means EU feels its priority in the deal is on way to being sorted ie protecting single market and European businesses in it even if UK gets tariff and quota-free access. U.K. principle of sovereignty - right to make own rules - protected too /4

Leading EU diplomat to declare “We’re getting there.” BUT not when it comes to fish .. Here it’s not just about ongoing U.K.-EU differences but also tensions between EU coastal nations /5