The EU's chief Brexit negotiator said they will "give all the chances" to make talks with the UK a success and achieve a "good and balanced agreement".
Michel Barnier arrived in Brussels on Monday morning to brief EU ambassadors on Brexit negotiations, following the decision on Sunday by the UK and EU to continue negotiating over a trade deal.
There was fresh hope on the prospect of a deal after Boris Johnson and President of the European Commission Ursula von der Leyen agreed to “go the extra mile” and continue discussions beyond Sunday’s initial deadline.
However, the prime minister has repeatedly called for the UK to "get ready" for no deal and said that the two sides "remain very far apart" on the key issues.
Business Secretary Alok Sharma told ITV News "any deal that we want to have with the EU respects the fact that the UK is a sovereign nation, an independent nation, and that's the basis on which we will do a deal".
It is understood that the main sticking points remain fishing rights, the so-called level-playing field, and governance of the deal.
Downing Street said a no-deal Brexit was a "possible" outcome from the EU trade talks, signalling that there had been some improvement since the PM said it was the "most likely" scenario on Sunday.
Alok Sharma on the state of trade talks with the EU:
Mr Barnier told reporters: "As President Ursula von der Leyen said, our responsibility is to continue this very difficult negotiation.
"Never in the history of the European Union have we negotiated with a third country such an important agreement on trade of good and services, fisheries, energy, transportation, security of the citizens, and never had we to negotiate such an agreement in such a short time frame.
"We have been negotiating for only nine months. It took at least five years for all the previous agreements [between the EU and third countries].
"So we will give it all the chances, it is our responsibility for this agreement which is still possible, (to be) a good and balanced agreement."
The major sticking points in the negotiations - as they have been for months - are on fishing rights and the "level playing field" which Brussels wants to prevent unfair competition from the UK undercutting EU standards and state subsidy rules.
Mr Barnier added: "That means two conditions which are not yet met, which are free and fair competition, fair and free, fair and open.
"It goes together, as well as an agreement guaranteeing a reciprocal access, I insist, reciprocal, to markets and waters. And it is on those points that we have not yet reached with the British a balance. So we will keep working."
When asked when an end will be in sight, he said: "The end will be when we reach an agreement both on fair and free competition; and second, on the reciprocal access to waters and the markets."
Later, he said on Twitter that the "next few days are important" if the UK and the EU are to reach a deal.
He said: "It is our responsibility to give the talks every chance of success. "Never before has such a comprehensive agreement (trade, energy, fisheries,transport, police & judicial cooperation, etc) been negotiated so transparently and in such little time."
With no cut-off date given for when the talks must wrap up, it leaves the door open for the wrangling to go on until December 31 – when the transitional arrangements are due to cease.
If no deal is done by the end of the year then the UK will trade with the European Union on World Trade Organization (WTO) rules and tariffs.
Mr Barnier added: "Fair competition, and a sustainable solution for our fishermen and women, are key to reaching a deal."
Late on Sunday night, Europe Editor James Mates explained why there may be some hope for a deal
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. But the statements from both sides suggested that while further discussions would be held, substantial movement on the key issues had not been made.
Commons Leader Jacob Rees-Mogg has still not published the dates for MPs’ Christmas holiday, leaving those on the green benches braced to be called in to Westminster over the festive season to vote on a possible UK-EU trade deal.
Any deal agreed on by negotiators must be ratified by all 27 EU member states and in the Houses of Parliament.
Former chief whip Mark Harper, speaking to BBC Radio 4’s Westminster Hour, said: “It depends on when it is concluded, but many of us are fully anticipating it’s entirely possible we might be returning to Parliament between Christmas and new year to scrutinise this and vote it through if a deal is done.”
Shadow business secretary Ed Miliband told BBC One’s Andrew Marr Show that Labour was “minded” to vote for a deal in a sign that, should consensus be reached in Brussels, the terms of any future relationship with Britain’s largest trading partner would face little opposition in Parliament.
The Prime Minister and European Commission President Ms von der Leyen – who spoke for 20 minutes on the phone in a conversation described as perfectly cordial, by sources – averted a no-deal outcome over the weekend by agreeing to continue trying to find a compromise on the outstanding blockages.
Mr Johnson, speaking after the call, said the UK would not be walking away from the negotiating table and that “where there is life, there is hope”.
But the Conservative leader continued to warn that a no-deal outcome was still the most likely scenario.
He said the country should get ready for the breakdown of talks, resulting in tariffs under WTO terms from January 1 – a move that is predicted to cost jobs, cause food prices to rise and wipe £45 billion off the economy next year.
“The most likely thing now is, of course, that we have to get ready for WTO terms, Australia terms,” the prime minister said.
But the agreement to continue talking beyond the Sunday deadline set by Mr Johnson and Ms von der Leyen does indicate that progress could be possible.
The pair agreed to “keep going for as long as they still think a deal is possible”, a source said.
A joint statement issued by the two leaders said: “Our negotiating teams have been working day and night over recent days.
“And despite the exhaustion after almost a year of negotiations, despite the fact that deadlines have been missed over and over we think it is responsible at this point to go the extra mile.”
After updating the Cabinet on his talks with the Commission chief, Mr Johnson told reporters the UK would be “as creative as we possibly can” in search of an agreement but stressed that there were fundamentals that could not be compromised, such as “being able to control our laws, control our fisheries”.
“I think our friends get it, and we remain willing to talk and will continue to do so,” he added.
The major sticking points in the negotiations are on fishing rights and the “level playing field”, on which Mr Johnson has said that no prime minister could accept a situation where the EU could automatically “punish” the UK if it failed to follow future regulations from Brussels.
If that “ratchet clause” was watered down, there could be the possibility of a deal – the UK side has already indicated it would not regress from existing EU standards on issues such as workers’ rights and environmental protections.
The Times reported that chief negotiators Lord Frost and Mr Barnier are discussing what role independent arbitration could have in resolving disputes in a potential sign that a compromise could be in the offing.
The pair are due to continue talking in Brussels on Monday.
On fishing rights, the row over what access EU trawlers would have to UK waters dramatically escalated over the weekend, with Royal Navy vessels on stand-by to patrol the seas around Britain if there is no deal.
Despite his talks with Ms von der Leyen in recent days, the Prime Minister remains frustrated that he has not been able to speak directly to key EU national leaders including Germany’s Angela Merkel and France’s Emmanuel Macron.
Brussels insists that the Commission is leading the negotiations on behalf of the 27 member states so Mr Johnson should continue dealing with Mrs von der Leyen.