“The EU prefers a deal, but not at any cost,” Mr Michel warned – after the UK’s chief negotiator admitted no “extensive text” on state aid rules would be submitted.
Downing Street said after the talks that the two sides would aim to “bridge gaps” before a milestone European Council summit schedule next week, but said “significant differences” remain.
It is the second time in recent days that Mr Johnson has been accused of failing to offer anything new to bring a deal closer – despite his own 15 October deadline for striking one being just a week away.
After his weekend talks with Ursula von der Leyen, the Commission president, EU sources made clear its irritation that he was failing to get down to crucial details.
The criticism came as the EU’s team arrived in London for fresh talks, due to last until Friday, with more negotiations in Brussels next week before the European Council meeting.
Both sides now appear privately resigned to talks continuing long beyond that summit on the 15th – long pinpointed as the deadline – if a trade agreement is to be achieved.
The EU has attacked the UK for failing to explain how it will regulate state aid, or settle disputes, in order to deliver the ‘level playing field’ Mr Johnson signed up to a year ago.
However, earlier, the UK’s chief negotiator admitted talks on the key obstacle to an agreement were “only just beginning – with the two sides are “some way from a deal”.
He revealed a new UK offer to limit future state aid, put forward last week, is “not an extensive text” and that “details” will not be produced until next year.
“We are some way from a deal at the moment, if I'm honest,” he told a Lords inquiry – with the date for the UK to crash out of the transition period less than three months’ away.
Lord Frost also did not deny that vital security data – to target terrorists and organised criminals – will be automatically “deleted” if it ends in a no-deal Brexit.
But he insisted the UK would not shut the door to a deal, even if Mr Johnson’s deadline of mid-October is missed, saying: “Our door would never be closed.”
Asked at a later hearing of a House of Commons committee whether there will be a deal by the PM’s self-imposed deadline, Frost said only: “My job is to get as far as we can before the 15th and then I will have to advise the prime minister whether the conditions for a basis of an agreement are in place at that point, and what happens thereafter.”
Lord Frost told the Commons Committee on the Future Relationship with the EU that it remains the UK’s stated policy that it will prepare to leave on World Trade Organisation terms if no deal is in place by the end of next week, telling MPs: “It is really important that we try to bring some certainly to stakeholders, given the imminent end of the transition period and all the preparations that need to be done.”
Cabinet Office minister Michael Gove told the committee he believed there was a 66% chance of a free trade agreement with the EU, while Lord Frost said: “I think a deal is eminently achievable and could be achieved, but equally it is possible that we won’t get there.”
Mr Gove pointed to tensions as he attacked the portrayal of the EU as “upholders of virtue” – with the UK as a “potential rogue”.
He admitted the extra red tape for business – even if a deal is reached, outside the single market and customs union – mean there was little difference from a no deal.
Mr Gove took inspiration from the world of pop as he said he was prepared to take responsibility for any traffic gridlock caused in Kent caused by the transition out of the EU, telling the Commons committee: “If things go wrong, then - to paraphrase Rag’n’Bone Man - put the blame on me.”
And he refused to commit to withdrawing the clauses in the Internal Markets Bill that break international law, even if the EU backed down, saying: “Wait and see.”
Lord Frost told MPs that differences over fisheries was “the most difficult issue remaining”, and confirmed that the UK had offered a transition period away from the current quota system to allow continental fleets to adapt to new arrangements.
“Obviously there’s going to be an effect on EU fishing communities, and it seems entirely reasonable for us that - providing that the endpoint is one we wish to get to - therre could be some glide path to get there,” he told the Commons committee.
But he added: “I don’t think we would wish to conclude an agreement that didn’t satisfy the reasonable expectations of UK fishermen.”
Mr Michel, who represents the interests of member states, spoke with Mr Johnson by phone on Wednesday.
Downing Street later released a statement saying that the call had allowed both sides to “take stock of negotiations"
“The prime minister outlined our clear commitment to trying to reach an agreement, underlining that a deal was better for both sides," said a spokesman. "He also underlined that, nevertheless, the UK was prepared to end the transition period on Australia-style terms if an agreement could not be found.
“Although some progress had been made in recent discussions, they acknowledged that significant areas of difference remain, particularly on fisheries. Chief negotiators should continue to work intensively in the coming days to try to bridge the gaps.
“The prime minister reiterated that any deal must reflect what the British people voted for and that businesses and citizens needed certainty very soon on the terms of our future relationship. “They agreed to remain in touch on this issue.”
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