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The EU’s chief negotiator said he felt “worried and disappointed” over the UK’s approach to the discussions following the unsuccessful meeting with his British counterpart in London on Tuesday. EU diplomats said Mr Barnier made the overseas trip to tell Mr Frost Britain must move on state aid, or there will not be a Brexit agreement.

The chances of Britain leaving the European Union without a trade deal have risen sharply as negotiations have been threatened by London’s insistence that it have full autonomy over its state aid plans.

Mr Barnier warned: “The EU will not sacrifice its principles for the sole benefit of the UK.”

He said Brussels has demonstrated its willingness to move on contentious areas and “shown in many issues real openness in the past months”.

But he said the UK had not budged on its red lines, which he found disappointing.

Mr Barnier said the bloc recognised Britain’s commitments to fair competition, fishing rights and governance, including the European Court of Justice, and was willing to compromise.

But he said Mr Frost’s team had refused to table proposals on fisheries or state aid.

He said: “On all these issues, the UK sides continue to disappoint.”

On Tuesday the next round of trade negotiations will kick off just one month before the agreed deadline for any deal.

While both sides have struggled to find common ground in meetings, one thing they have agreed on is that any deal would have to be sealed by October to allow for enough time for it to be approved.

Mr Johnson has repeatedly ruled out extending the Brexit transition period beyond the December 31 deadline.

On Saturday The Times reported that the EU is demanding a potential veto on Britain’s post-Brexit laws and regulations, citing senior government officials.

Mr Barnier is said to be insisting that London must agree not to implement any change to UK legislation that could distort trade with the bloc without first consulting Brussels.

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Mr Frost has rejected the approach, the paper reported.

On Friday Mr Frost said the EU’s tough stance over state aid and fisheries may limit the progress that can be made in key talks next week.

He said Britain had been clear from the beginning about what it could accept in those areas, which he said were “fundamental to our status as an independent country”.

He tweeted: “We will negotiate constructively but the EU’s stance may, realistically, limit the progress we can make next week.

“From the very beginning we have been clear about what we can accept in these areas, which are fundamental to our status as an independent country.”

Failure to reach a trade deal could roil financial markets as nearly a trillion dollars in trade, from car parts and medicines to lamb and fish, would be thrown into turmoil.

A senior EU diplomat said: “The chances for a deal, or a no-deal, are 50/50.

“There has been absolutely no movement from the British side in the talks.

“If this approach doesn’t change quickly, we won’t be able to negotiate a deal in time.”

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