With just five weeks left until the United Kingdom finally exits the EU's orbit on Dec. 31, both sides are calling on the other to compromise on the three main issues of contention - fishing, state aid and how to resolve any future disputes.
The two sides will shortly resume face-to-face negotiations after they had to be suspended last week when one of EU chief negotiator Michel Barnier's team tested positive for COVID-19.
"Clearly there are substantial and important differences still to be bridged but we're getting on with it," British Prime Minister Boris Johnson told reporters.
"The likelihood of a deal is very much determined by our friends and partners in the EU -- there's a deal there to be done if they want to do it."
Barnier said on Twitter he would travel to London on Friday evening for talks with Britain's chief negotiator David Frost.
"Same significant divergences persist," Barnier said.
Neither side has so far shown a willingness to shift enough on the three outstanding issues to allow a breakthrough.
"It is late, but a deal is still possible, and I will continue to talk until it's clear that it isn't," Frost said.
"FEW DAYS LEFT"
Britain formally left the EU on Jan. 31 but has been in a transition period since then under which rules on trade, travel and business remain unchanged. From the start of 2021 it will be treated by Brussels as a third country.
One EU diplomat said there are "only a few days left" for the talks, which have previously continued through numerous broken deadlines.
"The gaps on level playing-field, governance and fisheries remain large," the diplomat said following a closed-door briefing given by Barnier to national diplomats on the progress of the negotiations.
"Without London taking the necessary decisions quickly, reaching a deal will be all but impossible."
A "no-deal" exit would snarl borders, spook financial markets and disrupt delicate supply chains that stretch across Europe and beyond -- just as the world grapples with the vast economic cost of the COVID-19 outbreak.
EU ambassadors called on the executive European Commission to urgently prepare contingency measures for a no-deal. But Barnier is reluctant to go down the contingency route as he still believes a deal can be struck, another EU diplomat said.
The first sign of movement -- either towards a deal or that talks are crumbling -- is likely to be a call between Johnson and Commission president Ursula von der Leyen. No such call has yet been announced.
A source close to the negotiations said it had been "tough" recently to make progress. Von der Leyen said on Wednesday the EU was ready for a no-deal Brexit if necessary.
The two sides are trying to strike a trade deal on goods that would safeguard nearly $1 trillion in annual trade and buttress peace in British-ruled Northern Ireland.
The latter is a priority for U.S. President-elect Joe Biden, who has warned Johnson he must uphold the 1998 U.S.-brokered Good Friday Agreement that ended three decades of sectarian conflict in Northern Ireland.
(Reporting by Gabriela Baczynska and John Chalmers in Brussels and Guy Faulconbridge and Kate Holton in London; Editing by Catherine Evans and Gareth Jones)
By Gabriela Baczynska and Guy Faulconbridge