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Brexit negotiations have again broken up without significant progress and with a frustrated EU accusing the UK of “backtracking” on previous commitments.

Brussels chief negotiator Michel Barnier claimed British negotiators “continue to backtrack” on the political declaration Boris Johnson agreed alongside the withdrawal agreement which set out the terms of the UK’s exit from the EU.

But a senior UK negotiating source said the declaration only set the “parameters” of the negotiations on a long-term trade deal and “doesn’t require everything in it to be agreed”.

There are growing fears that the UK could leave the Brexit transition period on December 31 without a trade deal, which would mean significant barriers and costs imposed on businesses already struggling to deal with coronavirus.

Both sides want progress urgently, with Barnier declaring: “There has been no significant progress on these points, not since the start of the negotiations.

“And I don’t think we can go on like this forever.”

The UK meanwhile has recognised that the pandemic has slowed the pace of talks, having previously called for an outline deal by June. British negotiators want to see meaningful progress by July.

“We can’t have a situation where this drags into the autumn and all our businesses and all our individuals don’t know the basis on which they will be trading and don’t prepare,” the source said.

“We can’t have that.” 

The talks remain stuck on the key areas of fishing rights and the so-called “level playing field”, with the EU wanting the UK to agree minimum standards in areas like workers’ rights, the environment and state aid.

The UK is unwilling to either offer a long-term agreement on fishing, preferring annual negotiations over British waters, or accept a level playing field which ties Westminster into accepting EU laws.

The UK has abandoned its commitment to a deal without tariffs or quotas in a bid to get the talks unblocked, an approach that could impose massive costs on some British businesses.

But the source said this “fell on slightly stony ground” in the discussions, despite being an “obvious way forward” to unblock talks on the level playing field.

The UK feels it is being offered only a “binary choice” between the EU-proposed agreement and no deal at all, and wants the talks streamlined and sped up to find common ground.

But Barnier insisted the UK must stick to its commitments in the declaration “if we want to move forward”.

He told a Brussels press conference: “My responsibility is to speak the truth and to tell the truth this week there have been no significant areas of progress.”

On the key area of fisheries, he said the UK has “not shown any true will” to explore compromises.

And he said both sides were still “very far” from reaching agreement on the level playing field, nuclear safety, anti-money laundering and counter-terrorism funding, and a “overarching institutional framework” for the future relationship.

“In all areas, the UK continues to backtrack under commitments undertaken in the political declaration, including on fisheries,” Barnier said.

“We cannot and will not accept this backtracking on the political declaration.”

UK chief negotiator David Frost said in a statement: “Progress remains limited but our talks have been positive in tone. Negotiations will continue and we remain committed to a successful outcome.

“We are now at an important moment for these talks. We are close to reaching the limits of what we can achieve through the format of remote formal rounds. 

“If we are to make progress, it is clear that we must intensify and accelerate our work. We are discussing with the commission how this can best be done.

“For our part we are willing to work hard to see whether at least the outline of a balanced agreement, covering all issues, can be reached soon.”

Josh Hardie, deputy director-general of the CBI business lobby, said a failure to reach a deal would be “deeply damaging”.

“An ambitious deal with the EU will be a cornerstone of the UK’s recovery from the pandemic.

“Progress is worryingly slow, causing deep concern to firms when resilience has rarely been more fragile.

“The stark reality is that most businesses are understandably unprepared for a dramatic change in trading relations with our biggest partner in just six months’ time.

“With jobs in every region of the U.K. and EU under pressure, the stakes are higher than ever.

“A deal that works for both sides economies is the only way forward. Political leaders should step in urgently, change the dynamic and find solutions that protect people’s livelihoods.” 

Best for Britain CEO Naomi Smith said: “The lack of progress in these negotiations is deeply concerning when you consider the looming deadline for an extension to the transition period on 30 June. 

“It is incredibly important that the UK makes good on its commitments under the Northern Ireland protocol and elsewhere in the political declaration if we wish to maintain our global influence and make a success of Brexit going forward.

“Without doing so, we face the possibility of ending the transition period at the end of the year without a deal, in the middle of the worst recession for a century.

“And if we cannot support these commitments at this time due to the scale of the public health crisis at hand, then we must give ourselves more time by extending the Brexit transition period.”

Boris Johnson and European Commission president Ursula Von Der Leyen are expected to meet this month for high level talks which both sides will hope can unblock negotiations.