Boris Johnson was locked in a stand-off with Emmanuel Macron last night as Brexit talks teetered on the brink.
British officials claimed the French president had pressured European Union chief negotiator Michel Barnier to take a hardline stance.
A close Macron ally yesterday said he would veto any trade deal that went against French interests. But UK sources said the president did not respect Britain's independence and was trying to shield his nation's firms from competition.
One insider warned there would be no deal unless Mr Macron backed down.
A week of marathon negotiations fuelled by late-night pizzas broke up inconclusively in London last night.
In a joint statement, Mr Barnier and the PM's chief negotiator David Frost said: 'The conditions for an agreement are not met, due to significant divergences on level playing field, governance and fisheries.'
Boris Johnson was locked in a stand-off with Emmanuel Macron last night as Brexit talks teetered on the brink. British officials claimed the French president had pressured European Union chief negotiator Michel Barnier to take a hardline stance. Above, Barnier (centre) and his EU team on Friday night
Barnier's telling tweet: Mr Barnier is expected to return to Brussels this morning to warn the negotiations are in peril
A close ally of Emmanuel Macron yesterday said he would veto any trade deal that went against French interests. But UK sources said the president did not respect Britain's independence and was trying to shield his nation's firms from competition. One insider warned there would be no deal unless Mr Macron backed down. (Above, Macron in Paris)
In a joint statement, Mr Barnier and the PM's chief negotiator David Frost (right) said: 'The conditions for an agreement are not met, due to significant divergences on level playing field, governance and fisheries.' Boris Johnson will hold talks with European Commission chief Ursula von der Leyen this afternoon to try to rescue the process. But Lord Frost is said to believe there is little prospect of progress unless EU leaders persuade Mr Macron to back down
The two envoys said the talks had been 'paused' to allow political leaders to decide the next step. Mr Barnier is expected to return to Brussels this morning to warn the negotiations are in peril.
Mr Johnson will hold talks with European Commission chief Ursula von der Leyen this afternoon to try to rescue the process.
But Lord Frost is said to believe there is little prospect of progress unless EU leaders persuade Mr Macron to back down.
Failure to strike an agreement would leave the two trading partners to deal with each other on World Trade Organisation terms from the start of next month when the Brexit transition period ends.
This would lead to the imposition of tariffs on a wide range of goods, including levies of at least 40 per cent on lamb and 10 per cent on cars. British sources believe Mr Macron pressured Mr Barnier into adopting a tougher stance, which threw talks into reverse on Thursday night.
The two sides had been inching toward an agreement on the 'level playing field' issue, which has been deadlocked for months.
Mr Johnson was ready to accept the inclusion of 'non-regression clauses' into the deal, which would have guaranteed no cuts to current standards on state aid subsidies, workers' rights and environmental standards.
But Mr Barnier is then said to have dramatically brought back earlier demands for a so-called 'ratchet clause' to make the UK follow future EU laws in these areas. Britain would be threatened with retaliatory tariffs if standards fell below those in the EU.
Mr Johnson was ready to accept the inclusion of 'non-regression clauses' into the deal, which would have guaranteed no cuts to current standards on state aid subsidies, workers' rights and environmental standards
The two sides had been inching toward an agreement on the 'level playing field' issue, which has been deadlocked for months. Above, sandwiches were delivered to the talks today, which are taking place at the Department for Business in Westminster
A UK source said: 'At the start of the week we saw Macron agitating with other EU capitals that they were giving away too much. Then you see Barnier bringing this back and the whole process goes backwards. I think everyone can join the dots.
'We want a deal but it has to be on the basis that we are a sovereign country again. Some people still seem to be struggling with the concept that we are going to be an independent country setting our own rules. If it stays like that there will be no deal.'
Talks have also hit stalemate over fishing, where Mr Macron has been pushing for French trawlers to maintain their existing access to British waters.
Mr Barnier is said to have demanded a ten-year transition to any reduction in EU fishing access – a time period branded unacceptable by Downing Street.
UK ministers now hope that Angela Merkel and other EU leaders will force Mr Macron to back down. Steffen Seibert, the German chancellor's spokesman, warned last night that Berlin would not accept a deal 'at any price' but said his government believed there was 'room for compromise'.
Talks have also hit stalemate over fishing, where Mr Macron has been pushing for French trawlers to maintain their existing access to British waters. (Pictured, the PM and President Macron in London in June)
Earlier the French Europe minister Clement Beaune suggested Mr Macron could veto the entire deal.
Mr Macron, who faces re-election in 2022, has made lavish promises to French fishermen and is said to believe blocking a deal could bolster his popularity. Mr Beaune insisted Paris wanted a deal but added: 'France is attached to the interests of its fishermen, is attached to the fair business conditions.
'It's also the case for our partners that if, if there were a deal that isn't good, which in our evaluation doesn't correspond to those interests, we will oppose it. Yes each country has a veto, so it's possible.'
Negotiators had targeted a deal by tomorrow night at the latest in order to allow time for legal texts running into hundreds of pages to be prepared and translated ahead of an EU summit on Thursday, which is seen as the last chance.
Sources said it was possible negotiations could continue into the start of next week, but one warned: 'Time really is up this time.'
Josh Hardie, deputy director-general of the CBI, urged both sides to make compromises. 'I find it almost impossible to believe that politicians on both sides would allow our countries to slip into no deal. The mutual interest in getting a deal has genuinely never been stronger post-pandemic – or mid-pandemic.'
Some Eurosceptic Tory MPs urged Mr Johnson to walk away. Andrew Bridgen said: 'I am very worried that the Prime Minister is about to sign up to something unacceptable. If Boris sells us out on Brexit then he is finished, and I think he knows that.'
But former Tory minister Tobias Ellwood said 'It would be a retrograde step for global Britain.'
Could France veto a deal? When is the deadline? Your Brexit questions answered
What are the sticking points?
There are three key sticking points, which have hardly changed in months. The first is the EU's demand that Britain observe a 'level playing field' on issues such as state a id subsidies, workers' rights and environmental protections to prevent it undercutting the EU.
The second is fishing, where Brussels has demanded that EU trawlers maintain their existing rights to fish in British waters. The third is agreeing a mechanism for resolving disputes that is fair to both sides.
How can they be resolved?
The EU is nervous that its businesses could be undercut by British firms freed from the dead hand of Brussels red tape.
Boris Johnson is adamant that he will not tie the UK to EU rules after Brexit. In a bid to strike a deal, the Prime Minister has indicated he will agree to maintain 'level playing field' standards at at least the level they are now. Michel Barnier, the EU's chief negotiator, appeared to have agreed but, under pressure from French President Emmanuel Macron, demanded that Britain also agree to continue matching EU standards as they change in future. This is unacceptable to the PM, who believes that the ability to set our own rules is the right of any independent state and a key benefit of Brexit that could allow the UK to outcompete the EU.
On fishing, most EU countries except France accept they will get lower fishing quotas in UK waters. Cuts to EU quotas could be phased in over a few years, but the UK is unwilling to accept a Brussels proposal for a decade-long transition.
Any dispute mechanism will have to put the UK's Supreme Court on an equal footing with the European Court of Justice for it to be acceptable to Tory MPs.
Will Tory Eurosceptics accept a deal?
Most Tory MPs will back a deal that allows the UK to take back control of its borders and laws. But if the PM compromises on key issues of independence, such as allowing a decisive role for the European Court of Justice, he could face a dangerous revolt. However, this is not likely to affect his chances of getting a deal through Parliament as Labour are expected to either back it or abstain.
Could France veto it?
Yes, all 27 member states have a veto. French Europe minister Clement Beaune warned yesterday that Mr Macron was ready to veto any deal not in France's interests.
When is the final deadline?
The Brexit process has had innumerable 'make or break' weeks, but sources on both sides agree the process is now in the endgame. Negotiators had been targeting a deal by tomorrow night in order for the hundreds of pages of legal documents to be translated in time for a Brussels summit on Thursday. But the process could now slip into early next week.
What about the UK's No Deal legislation?
MPs will vote on Monday to reinsert controversial clauses in the Internal Market Bill which override parts of last year's Brexit deal relating to Northern Ireland. The measures could have been dropped if a deal had been struck but now look certain to go ahead.
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