Downing Street sources have denied Brexit negotiations between the UK and European Union have broken down, but admit they are at an impasse. After two full days of talks in London, No 10 officials described the current state of play as neither a “breakthrough nor a breakdown”. The latest round is expected to end on Thursday without advancing on a deal. Michel Barnier, the EU’s chief negotiator, and his UK counterpart, David Frost, are in the midst of intensified discussions. A fifth round of talks will go ahead as planned next week, with another round scheduled for August unless agreed otherwise. Differences are said to remain on the issues of a level playing field for businesses, governance, state aid rules and fishing rights. The EU’s preference for a role for the European court of justice is also a sticking point. The prime minister’s official spokesperson said the UK was continuing to engage with the EU constructively. “Round five negotiations are ongoing and we remain committed to working hard to find the outlines of a balanced agreement … but significant differences still remain on a number of important issues,” he said. “Our preference is to leave with an FTA [free trade agreement] as long as it guarantees our political and economic independence. But we will make sure that we’re prepared for all possible scenarios.” He added: “The discussions do continue to be constructive and I think that’s been the case throughout this intensified state of the discussions, but equally I think we acknowledge that there are still significant differences on a number of important issues.” Some backbench Conservative MPs are said to be getting nervous that a deal will not be ready in time for the end of the transition period on 31 December 2020. Reports that Frost had said the UK would accept tariffs on certain goods are believed to have added to confusion among the Tory ranks about the government’s position. Labour is also said to be looking closely at recent polling that has shown voters in their former “red wall” strongholds overwhelmingly want Johnson to strike a deal on Brexit rather than walk away from talks. The north and Midlands could bear the brunt of the economic downturn because of the coronavirus pandemic and potential consequences of a no-deal scenario. The UK has piled on pressure to get a quick Brexit deal sealed this month, with Boris Johnson saying in June there was no reason an outline agreement could not be struck in July, urging the EU to put “the tiger in the tank”, a reference to a 1960s Esso slogan. However, his flamboyant approach was immediately punctured by the EU, which said it expected talks to go into September. Charles Michel, the European council president, batted back that the bloc was “ready to put a tiger in the tank but not to buy a pig in a poke”. One senior EU source predicted before the latest round of talks that the UK would try and “inject some drama and theatre” into the talks, with rows seen as a by-product of the tension to create the space for a deal.