Boris Johnson has warned the prospect of agreeing a trade deal with the EU is “looking difficult”, as Brussels’ chief negotiator Michel Barnier said there are “just a few hours” left in the Brexit talks.

The Prime Minister said on Friday the onus is on the bloc seeing “sense” and making a compromise or the transition period will end on December 31 without a deal, which he acknowledged would be “difficult” in the short-term.

Mr Johnson reiterated “no sensible government” could agree to a treaty that does not give the nation control of its laws and waters, two major sticking points for No 10 in the negotiations as the brinkmanship continued.

Speaking during a visit to Greater Manchester, the PM said: “Our door is open, we’ll keep talking, but I have to say things are looking difficult.

“There’s a gap that needs to be bridged, the UK has done a lot to try and help and we hope that our EU friends will see sense and come to the table with something themselves, because that’s really where we are.”

Mr Johnson spoke down the prospects of getting a deal after Thursday’s stocktake on the situation with European Commission president Ursula von der Leyen.

He accepted failing to broker a deal in time “may be difficult at first”, but he continued to insist the UK will “prosper mightily” and the nation must look to the “opportunities that will open up to this country in 2021”.

Earlier, Mr Barnier told the European Parliament that the two sides now stand at the “moment of truth” with a “very narrow” path to securing a breakthrough as talks resumed in Brussels.

“We have very little time remaining, just a few hours, to work through these negotiations in useful fashion if we want this agreement to enter into force on January 1,” he said.

“There is a chance of getting an agreement but the path to such an agreement is very narrow.”

He said he was being “frank with you and open and sincere” when he said that he was unable to say what the result will be from the “last home straight of negotiations”.

The EU set the latest deadline that an agreement must be ready by Sunday night in order to have enough time for MEPs to ratify it, while the House of Commons has been warned it may need to hastily return from Christmas recess to vote on a deal.

However, commission spokesman Eric Mamer said on Friday there is “no official deadline for finishing”.

After her call with the Prime Minister, Ms von der Leyen acknowledged “big differences” remained between the two sides and stressed that “bridging them will be very challenging”.

Downing Street said the Prime Minister warned it looked “very likely” a deal would not be agreed unless the bloc shifted its stance.

Agreement was getting closer on the “level playing field” to ensure neither side could unfairly compete by eroding environmental standards, workers’ rights or state subsidies, but fishing policy remained a major sticking point.

Mr Barnier’s counterpart at No 10, Lord Frost, warned that progress “seems blocked” ahead of talks resuming in Brussels.

“The situation in our talks with the EU is very serious tonight. Progress seems blocked and time is running out,” he tweeted on Thursday.

Labour leader Sir Keir Starmer on Friday told the Prime Minister to stop “dithering over Brexit” and produce the deal “as soon as possible” so the Government can focus on the coronavirus pandemic.

Cabinet Office minister Michael Gove, who has been in charge of the Government’s no-deal planning, said on Thursday that the chances of an agreement remained “less than 50%”.

Meanwhile, businesses set out their priorities for policy-makers to ease the effects of “cliff-edge” departure if no deal is brokered, including various grace periods for firms implementing new measures.

Confederation of British Industry director-general Tony Danker said: “There is no avoiding the urgent need for action, starting first and foremost with securing a deal.

“Firms have done so much to get ready for the changes ahead. But with less than a fortnight until January 1 to get ready, bold steps are needed to minimise disruption.”