Boris Johnson and European Commission president Ursula von der Leyen have agreed to make a final push to get a post-Brexit trade deal in time for the end of the year.
Following a telephone call lasting more than an hour, the two leaders acknowledged that there were still “significant differences” on key issues standing in the way of an agreement.
In a joint statement, they said they were instructing their chief negotiators – Lord Frost and Michel Barnier – to meet in Brussels on Sunday to assess whether they could be resolved.
“In a phone call today on the on-going negotiations between the European Union and the United Kingdom, we welcomed the fact that progress has been achieved in many areas,” the statement said.
“Nevertheless, significant differences remain on three critical issues: level playing field, governance and fisheries. Both sides underlined that no agreement is feasible if these issues are not resolved.
“Whilst recognising the seriousness of these differences, we agreed that a further effort should be undertaken by our negotiating teams to assess whether they can be resolved.
“We are therefore instructing our chief negotiators to reconvene tomorrow in Brussels. We will speak again on Monday evening.”
The call took place after Mr Barnier and Lord Frost announced on Friday that they were putting the talks on “pause” after the latest round of negotiations failed to achieve breakthrough.
The outstanding issues – fisheries, the so-called “level-playing field” rules on fair competition, and the governance arrangements for any deal – have been known for months.
What is unclear from the statement is whether either – or both – of the two leaders was prepared to shift ground during the call in a way that would enable their negotiators to bridge the gaps.
In the run up to the call, the UK accused the EU side of seeking to introduce “new elements” into the negotiations at the 11th hour.
The British side was angered by reported demands by Brussels that EU fishermen should continue to enjoy the same access to UK waters for another 10 years.
There was concern that Mr Barnier was coming under pressure from French President Emmanuel Macron at the head of a group of countries which feared he was giving too much ground to the UK.
Irish premier Micheal Martin, whose country is among those most anxious to get an agreement, welcomed the announcement that the talks would continue.
“An agreement is in everyone’s best interests. Every effort should be made to reach a deal,” he tweeted.
For Labour, shadow cabinet office minister Rachel Reeves called on both sides to resolve their differences as swiftly as possible.
“The British people were promised a deal and, with time running out, we urge both sides to get on with reaching an agreement,” she said.
However, Brexit Party leader Nigel Farage expressed concern that they were moving towards yet another extension of Britain’s period under EU rules.
“I do hope that this lack of an agreement does not mean we are heading for an extension,” he tweeted.
“After four and a half years, Brexit voters won’t tolerate that.”
Sunday’s talks take place with time rapidly running out if there is to be an agreement in place by the end of the month, when the current Brexit transition period finally comes to an end.
EU leaders are due to meet on Thursday for a two-day summit in Brussels – their last scheduled gathering of the year – when they could sign-off on any agreement.
Time then has to be found for both Houses of Parliament in the UK and the European parliament to ratify it before the transition period expires – although there have been suggestions that could slip in the EU side.
If there is no agreement, the UK will leave the European single market and customs union on December 31 and begin trading with the bloc on World Trade Organisation terms, with the imposition of tariffs and quotas.
In a further complicating factor, the UK Government is bringing back to the Commons legislation enabling it to override elements of Mr Johnson’s “divorce” settlement with Brussels in breach of international law.
On Monday, MPs will vote on whether to overturn amendments by the House of Lords which removed the provisions in the UK Internal Market Bill relating to the Irish border.
MPs will then go on later in the week to debate the Taxation (Post-Transition Period) Bill which contains further similar provisions.
The legislation has infuriated the EU and – if it is passed – could further sour the mood in the negotiations making a deal harder to reach.