Both sides are seeking an agreement to govern their trading relationship once the UK's post-Brexit transition period ends in January 2021. The UK and the EU are calling on each other to compromise ahead of the looming December deadline for a deal, with key sticking points including fishing rights and post-Brexit competition rules.

EU Chief Brexit Negotiator Michel Barnier has said that a trade deal with the UK was "within reach" but that both sides must be prepared to make compromises to get it over the line.

The former French foreign minister said he would work 'day and night' in a statement that the UK government claimed was 'significant'.

Downing Street said the remarks will be studied 'carefully' ahead of a phone call between the EU's chief negotiator and his UK counterpart David Frost this afternoon.    

But Barnier cautioned that preparations must be made for a no-deal scenario in case the UK and EU fail to reach agreement in negotiations.

Meanwhile, President of the European Council Charles Michel stressed that the UK could not have its “cake and eat it too” and that the UK had “a big decision to make” about the future relationship.

Trade talks are currently stalled and time is short to reach an agreement before the end of the transition period. This 11-month period is due to end in December, and the UK has ruled out seeking an extension.

EU's Sefcovic Warns UK Implementation of Withdrawal Agreement Needed for Future Trade Deal

The United Kingdom should fully implement the Brexit Withdrawal Agreement, which became effective on 1 February after the UK left the bloc, in order for both parties to agree on a comprehensive free trade deal by the end of the year, Maros Sefcovic, vice-president of the European Commission, said on Wednesday.

Sefcovic spoke in the European Parliament during a plenary session that followed the European Council meeting held at the end of the previous week. The European Commission vice-president said that he understood the concerns raised by lawmakers over the UK's failure to implement the Withdrawal Agreement in full and over London's attempts to revise the agreement.

Several lawmakers "made it very clear that there cannot be a new deal unless the last one is properly respected," Sefcovic stated, adding that he thought this matter was "very clear, very simple."

Negotiators from both London and Brussels have just over two months to conclude a comprehensive agreement to avoid trading on World Trade Organization terms from 1 January onwards. Sefcovic told the parliament that his recent conversations with Michael Gove, a UK cabinet minister, had been encouraging.

"At the same time, I have to say that this Monday I was encouraged, because we had a good, constructive discussion with Chancellor Gove. I think we are advancing very well on guaranteeing citizens' rights as we promised to UK and EU citizens in the Withdrawal Agreement," the European Commission vice-president said.

The UK's controversial Internal Market Bill, which looks to revise earlier commitments on state aid and customs regulations in Northern Ireland that were included in the Withdrawal Agreement, has drawn the ire of the European Union.

Brussels has accused UK Prime Minister Boris Johnson's government of attempting to violate international law by revising the prior agreement.