Michel Barnier has said a trade and security deal with Boris Johnson’s government by the end of the year appeared “unlikely”, as he complained that Britain was demanding “near total exclusion” of European fishing boats from its waters. After the latest round of negotiations in London, the EU’s chief negotiator told reporters in a virtual press conference that the two sides were “still far away” from agreement with just three full months to go before a 31 October deadline. Despite signs of compromise in some key issues, including on the need for a single deal rather than multiple sectoral agreements, the EU official said there had been “no progress” on the two most difficult areas: the rights of European fleets in British waters; and ensuring neither side drives down regulatory standards or is able to unfairly subsidise their businesses. In a statement, the UK’s chief negotiator, David Frost, concurred that there were “considerable gaps” but insisted that an agreement could still be reached in September. UK sources said Barnier’s assessment that the talks were “back at an impasse” accurately described the situation, but added this was for technical reasons that could be surmounted over the summer. The two sides are to meet for two days of informal talks next week before a formal round of negotiations in mid-August. But Johnson’s optimistic hopes of agreeing an outline of the principles of a deal by the end of this month had been dashed, Frost conceded. “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,” the UK official said. In his remarks at the end of the week’s talks, Barnier had focused on fishing rights and the UK’s failure to offer reassurances on its state aid regime from the end of the 2020 as the major obstacles to a deal. “The UK is effectively asking for near total exclusion of EU fishing vessels from UK waters,” Barnier said. “That is simply unacceptable.” He said the EU was willing to accept that “there may be change to the benefit of UK fishermen” but that it would not be at the price of the “destruction of the EU fishing industry”. On state aid, Barnier said the UK had failed to offer any assurances on how it would regulate subsidies once the country was outside the single market and customs union at the end of 2020. “We need consistency or some sort of equivalence between our respective systems,” he said. “We need to see what is ahead of us. I understand what David said that the UK is still going through an ongoing debate, parliament and government are still working on this but the debate does still have to make some sort of progress.” Barnier said: “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.” He added: “It means simply that by its current refusal to commit to the condition of open and fair competition, and to a balanced agreement on fisheries, the UK makes a trade agreement at this point unlikely.” In notably more optimistic comments, Frost highlighted the EU’s “pragmatic” acceptance that the European court of justice would not have any jurisdiction in the UK and the British recognition, in turn, of the need for there to be one all-encompassing deal. “We have heard the EU’s concerns about a complex Switzerland-style set of agreements and we are ready to consider simpler structures, provided satisfactory terms can be found for dispute settlement and governance,” he said. Frost conceded, however, that given the difficulties that remained, there was still the risk of a deal not being secured. “Although we will continue energetically to seek an agreement with the EU, we must face the possibility that one will not be reached, and we must therefore continue preparing for all possible scenarios for the end of the transition period at the end of this year,” he said.