The European Union must make a “substantial shift” if Brexit trade talks are to be saved.
That was the warning from Britain in the final days of negotiations between the two sides ahead of the transition period ending on 31 December.
Talks are continuing in Brussels this weekend but UK sources say it is increasingly likely that an agreement will not be reached in time.
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A UK government source said: “We need to get any deal right and based on terms which respect what the British people voted for.
“Unfortunately, the EU are still struggling to get the flexibility needed from member states and are continuing to make demands that are incompatible with our independence.
“We cannot accept a deal that doesn’t leave us in control of our own laws or waters.
“We’re continuing to try every possible path to an agreement, but without a substantial shift from the commission we will be leaving on World Trade Organisation terms on 31 December.”
The European Parliament has said there must be a deal by Sunday evening to allow time for it to be ratified before the end of the transition period.
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‘There could well be disruption on 1 January”
The pessimism was shared by Ireland’s foreign minister Simon Coveney, who told The Sunday Times: “I don’t see this being agreed easily in the next 24 hours.
“We may see a standoff over fish.”
Fishing rights is one of the main issues standing in the way of a deal, along with the “level playing field” – measures to prevent what is seen as unfair competition through the lowering of standards or the use of state subsidies.
Mr Coveney said: “It won’t surprise me if this issue collapses the whole negotiation. It certainly has the capacity to do it.”
He also said that he found it difficult to see the EU fishing states – Ireland, France, Belgium, Denmark and the Netherlands – backing an agreement that goes beyond the current offer.
If there is no deal by 31 December, the UK will leave the single market and customs union and begin trading with the EU on WTO terms, meaning tariffs that could mean higher prices for consumers.