At the conclusion of the latest round of talks, the UK’s chief negotiator also admitted that a deadline for a breakthrough by the end of July would be missed, adding that “we must face the possibility that one will not be reached”.
Talks will continue with an informal round in London next week, but the comments will raise fears of a ‘no deal’ scenario, with significant new tariffs and barriers on trade between the UK and the EU.
Some progress has been made, with the EU offering concessions on the jurisdiction of the European Court of Justice, and the UK said it had “heard the EU’s concerns” about the structure of the type of free trade agreement it is calling for.
But UK chief negotiator David Frost said "considerable gaps remain in the most difficult areas", particularly on the issue of fishing quotas.
In a statement, he said: "It is unfortunately clear that we will not reach in July the 'early understanding on the principles underlying any agreement' that was set as an aim at the high-evel meeting on June 15."
Mr Frost added: "We have also had constructive discussions on trade in goods and services, and in some of the sectoral agreements, notably on transport, social security cooperation, and participation in EU programmes. We have also continued to deepen our understanding of each other's constraints on law enforcement.
"But considerable gaps remain in the most difficult areas, that is, the so-called level playing field and on fisheries.
"We have always been clear that our principles in these areas are not simple negotiating positions but expressions of the reality that we will be a fully independent country at the end of the transition period."
At a press conference in Brussels, EU chief negotiator Michel Barnier said Brussels had engaged "sincerely", adding: "Over the past few weeks the UK has not shown the same level of engagement and readiness to find solutions respecting the EU fundamental principles and interests."
Mr Barnier said the UK's position on fisheries is "simply unacceptable".
He said: "On fisheries, the UK is effectively seeking for near-total exclusion of fishing vessels from the UK's water. That is simply unacceptable."
Mr Barnier said considerable gaps remain between the UK and EU on the so-called "level-playing field" arrangements
He added: "This week again the UK did not show a willingness to break the deadlock.
"On the level-playing field the UK still refuses to commit to maintaining high standards in a meaningful way. On state-aid, despite a clear warning in the political declaration, very clear, we have made no progress at all.
"This is all the more worrying because we have no visibility on the UK's intention on its future domestic subsidy control system and regime."
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