The UK and European Union have made “substantial progress” in reaching a post-Brexit trade deal – but “big differences remain”, Brussels’ top official has said.
European Commission president Ursula von der Leyen said in a statement following a call with Boris Johnson that bridging the outstanding issues will be “very challenging”.
The Prime Minister underlined that negotiations were now in a “serious situation” and said it was likely a deal would not be reached, according to a Downing Street readout.
Negotiations between the UK and EU will continue on Friday but time is running out to reach a deal with just a fortnight until the end of the transition period.
After the 7pm call – which was not expected to be a breakthrough moment – Mrs von der Leyen said: “We welcomed substantial progress on many issues.
“However, big differences remain to be bridged, in particular on fisheries. Bridging them will be very challenging. Negotiations will continue tomorrow.”
Mr Johnson told the Commission president that it looked “very likely” a deal would not be agreed unless the EU position changed “substantially”, Number 10 said.
He urged the bloc to move on fisheries and said some “fundamental areas” remained difficult despite a narrowing of the gap on the “level playing field”.
A Downing Street spokeswoman said: “The Prime Minister underlined that the negotiations were now in a serious situation. Time was very short and it now looked very likely that agreement would not be reached unless the EU position changed substantially.
“He said that we were making every effort to accommodate reasonable EU requests on the level playing field, but even though the gap had narrowed some fundamental areas remained difficult.
“On fisheries he stressed that the UK could not accept a situation where it was the only sovereign country in the world not to be able to control access to its own waters for an extended period and to be faced with fisheries quotas which hugely disadvantaged its own industry.
“The EU’s position in this area was simply not reasonable and if there was to be an agreement it needed to shift significantly.
“The Prime Minister repeated that little time was left. He said that, if no agreement could be reached, the UK and the EU would part as friends, with the UK trading with the EU on Australian-style terms. The leaders agreed to remain in close contact.”
The UK’s chief negotiator Lord Frost meanwhile warned that progress in the talks “seems blocked”, tweeting: “The situation in our talks with the EU is very serious tonight. Progress seems blocked and time is running out.”
He and his EU counterpart Michel Barnier have been holding discussions in Brussels all week aimed at breaking the deadlock on key issues which have plagued the talks for months.
They include fishing rights, the “level playing field” to ensure neither side can unfairly compete with the other on environmental standards, workers’ rights or state subsidies, and the legal mechanisms to govern any deal.
Cabinet Office Minister Michael Gove, who has been in charge of the Government’s no-deal planning, said earlier on Thursday that the chances of an agreement remained “less than 50%”.
He told the Commons Brexit Committee the “most likely outcome” was that the current transition period would end on December 31 without a deal.
“I think, regrettably, the chances are more likely that we won’t secure an agreement. So at the moment less than 50%,” Mr Gove said.
He also said the Government will not seek to negotiate a fresh trade agreement with the EU next year if they cannot reach a deal before the end of the Brexit transition period.