The chances of the UK and the European Union securing a free-trade agreement this year have been rated as "unlikely" by the EU's chief negotiator, while the UK side said a deal could still be reached in September.

Britain officially left the EU in January and since then, talks on the trade agreement and other future ties have often looked to be struggling.

With the Brexit transition period – which has effectively left the UK-EU trading and travel arrangements unchanged despite the UK leaving – coming to an end on 31 December 2020, the latest round of negotiations was seen as key for a possible agreement.

British Brexit negotiator David Frost said the EU had failed to recognize the UK's economic and political independence on the main issues, calling the gulf between Brussels and London on those points "considerable."

Read more: What happens if the UK cannot agree a Brexit deal with the EU?

"It is unfortunately clear that we will not reach in July the early understanding on the principles underlying any agreement." 

In turn, the EU's top Brexit negotiator, Michel Barnier, said London had refused to move on its red lines, saying they were not showing "the same level of engagement and readiness to find a solution."

"By its current refusal to commit to conditions to open and fair competition and to a balanced agreement on fisheries, the UK makes the trade agreement – at this point – unlikely," Barnier said, following the face-to-face talks in London.

"The time for answers is quickly running out," he added. "If we do not reach an agreement on our future partnership, there will be more friction."

Disputes and progress

The main stumbling blocks to a deal are around the issues of fair competition guarantees – the so-called level playing field for businesses – and fisheries.

Without a deal to govern future trade flows between the EU and the UK, some companies fear there will be expensive disruption at the border from 2021, particularly in light of the economic pressures caused by the novel coronavirus crisis.

Brussels and London did note some progress in other areas.

"Looking forward, there are large areas of convergence in many of the areas on which we are negotiating and ample precedents and texts on which we can base our work," said Frost.

Watch: Brexit Deal or Brexit No Deal?: The Agenda full episode

Barnier also noted some positive developments during this week's talks around how to settle any future disputes over a new EU-UK agreement, a previous stumbling block in the talks. 

"Despite all the difficulties," said Frost, "on the basis of the work we have done in July, my assessment is that agreement can still be reached in September, and that we should continue to negotiate with this aim in mind."

Both sides appear to agree a deal could be reached but only if the other makes concessions. Barnier stressed that they were still "far away" from each other on crucial issues, with only a few weeks left to go.

"Obviously we must prepare for every outcome," said Frost. "It is possible that we won't reach an agreement, but we're going to work very energetically to try to do so."