TRADE talks between Britain and the European Union are in a “difficult phase,” Business Secretary Alok Sharma admitted today after a government source suggested that hopes of a deal were “receding.”

If an agreement is not reached this month, Britain’s trade with the EU will be governed by World Trade Organisation rules after the Brexit transition period ends on December 31.

Mr Sharma acknowledged that there are “a number of tricky issues” still outstanding, but he stressed that the government’s negotiating team is working hard to strike a deal.

The issues remaining be resolved include fishing rights and the so-called “level playing field” on state subsidies and standards, which the EU is demanding to avoid “unfair” competition.

A Downing Street spokesman said: “Time is in very short supply and we are at a very difficult point in the talks.

“What is certain is that we will not be able to agree a deal which doesn’t respect our fundamental principles on sovereignty and taking back control.”

Negotiations were said to be showing promise this week but then appeared to stall on Thursday, with Britain claiming that Brussels was calling for fresh concessions at the 11th hour.

However the EU has dismissed the claims as mere “theatrics,” insisting that the same sticking points have remained since February. 

European Council president Charles Michel said that his side “wants a deal” but is ready for “all options.”

On Monday, the Commons will vote on the Internal Market Bill. 

MPs will be asked to reinsert the highly divisive Northern Ireland provisions into the legislation after the Lords voted to remove them.

The Bill would give ministers power to ignore provisions in the Withdrawal Agreement relating to the six counties.

In October, the EU launched a legal challenge to counter that threat.