Boris Johnson has said he is "hopeful" he can win a post-Brexit trade deal with the European Union when he travels to Brussels this week for face-to-face negotiations, but he accepted the "situation at the moment is very tricky".
The prime minister - who will meet European Commission President Ursula von der Leyen, to try bridge the "significant differences" on fishing rights, the level playing field, and governance - said he will do his "best to sort it out if we can".
The two leaders agreed to meet this week - though it is not yet clear when they will - following an hour and a half long phone call on Monday evening, in which the pair had "taken stock" of the state of negotiations, according to a senior government source.
On the likelihood of a deal, Mr Johnson said: "We are always hopeful but there may come a moment when we have to acknowledge that it is time to draw stumps, and that is just the way it is."
"We will prosper mightily, as I have always said, under any version, and if we have to go for an Australian solution then that's fine too."
Following the call, a statement from the pair said: "We agreed that the conditions for finalising an agreement are not there due to the remaining significant differences on three critical issues: level playing field, governance and fisheries.
"We asked our chief negotiators and their teams to prepare an overview of the remaining differences to be discussed in a physical meeting in Brussels in the coming days."
Brexit trade talks - the sticking points at a glance:
- Fishing rights: The UK wants total control over its own fishing waters after the Brexit transition period ends, with a 12 mile exclusion zone around the British Isles banning all foreign vessels. The EU wants the UK to stick to the Common Fisheries Policy, an EU agreement which gives member nations the rights to fish in European waters - more here.- Level Playing Field: This is a concept all EU nations agree to, which ensures member nations cannot undercut others by setting their own rules on issues such as the environment, taxation and state aid. The EU says a zero-tariff trade deal is dependent on the UK agreeing to a level playing field. The UK disagrees, saying a fundamental aspect of Brexit is that the UK will be able to set its own rules.- Governance of a deal: It's likely that any trade deal will eventually result in disputes. The EU wants the European Court of Justice to be the final authority in ruling over disputes. The UK says the ECJ should have no role and final decisions should be made by a bespoke arbiter.
Mr Johnson said he is prepared to keep trying for a deal right up until the wire, but added that a time must come when both sides accept no more progress can be made.
Asked whether his forthcoming meeting with President von der Leyen could achieve a breakthrough, the PM said he has to be "optimistic" but "it's looking very, very difficult at the moment".
"We will do our level best, but I would just say to everybody be in good cheer, there are great options ahead for our country on any view.," Mr Johnson added.
Ahead of the meeting, a senior government source said: "Talks are in the same position now as they were on Friday. We have made no tangible progress. It’s clear this must now continue politically.
"While we do not consider this process to be closed, things are looking very tricky and there’s every chance we are not going to get there."
Mr Johnson added: "We will see where we get to in the course of the next two days, but I think the UK Government's position is that we are willing to engage at any level, political or otherwise, we are willing to try anything.
"But there are just limits beyond which no sensible, independent government or country could go and people have got to understand that."