Boris Johnson has said that leaving the European Union without a free trade agreement still remains the “most likely outcome” as talks continue in Brussels.

The Prime Minister told his Cabinet on Tuesday that he was committed to continuing negotiations on the remaining areas of disagreement and re-emphasised the desire to strike a deal.

His official spokesman told a Westminster briefing: “(Mr Johnson) re-emphasised the desire to reach a free trade agreement – but not at any cost – and reiterated that any agreement must respect the independence and sovereignty of the UK.

“The Prime Minister made clear that not being able to reach an agreement and ending the transition period on Australian-style terms remained the most likely outcome but committed to continuing to negotiate on the remaining areas of disagreement.”

The spokesman also insisted that there remained enough time to pass legislation if a deal is reached to come into force at the end of the transition period.

The Prime Minister made clear that not being able to reach an agreement and ending the transition period on Australian-style terms remained the most likely outcome

Asked whether there were no circumstances under which some form of provisional arrangement would be required, the spokesman said: “We are confident that all of the necessary domestic UK legislation required for January 1 will be in force by the end of the transition period.”

The need for any deal to be approved by Parliament means talks cannot continue until New Year’s Eve, but MPs are braced for the prospect of sitting over the festive period.

Suggestions that a key sticking point had been overcome by the two sides agreeing on a joint dispute mechanism to prevent unilateral punishment if the UK strays from EU standards in the future were being downplayed.

A source close to the UK negotiators told the PA news agency: “The position is the same, talks remain very difficult.”

They said that Downing Street accepts there needs to measures to assess whether there is “genuinely unfair competition”, but stressed that “it needs to be reciprocal, needs to be based in arbitration and needs to be done in a fair way”.

“But we’re not close on this stuff yet. There’s a lot of outstanding details to go through, on other areas too, so there’s genuinely no reason to be excited about things today,” the source added.

It came as Labour former prime minister Gordon Brown warned that a failure to reach an agreement would be the “greatest failure of international statesmanship”.

He told a webinar held by the Child Poverty Action Group: “I worry because we’re falling out with Africa because we’re cutting overseas aid, we’re falling out with China over all sorts of things which may be justifiable, we’re falling out with Europe and we’re falling out with America.

“It’s really not a very good way to end the year and to start the next year.

“So I hope a deal is set and struck and it would be, in my view, the greatest failure of international statesmanship if Europe and the United Kingdom couldn’t actually arrange a deal that avoided chaos on January 1.”

The UK and EU’s chief negotiators Lord Frost and Michel Barnier are continuing talks in Brussels after reports that progress in the talks could see a deal agreed this week.

Mr Barnier is said to have told diplomats the UK had moved towards the bloc’s demands on the level playing field, according to the Daily Telegraph.

It said he told ambassadors the UK accepted a “rebalancing mechanism”, meaning it could face tariffs if it moves too far away from EU rules.

The Guardian reported that European Commission president Ursula von der Leyen said there had been “movement” and talks were “on the very last mile”.

Negotiations between the two sides were extended on Sunday after Mr Johnson and Mrs von der Leyen agreed to continue the process despite major differences remaining.

For months the talks have been deadlocked on the issues of fishing rights, the “level playing field” to ensure neither side can unfairly compete with the other on environmental standards, workers’ rights or state subsidies, and the legal mechanisms to govern any deal.

The UK’s current trading arrangements with the EU expire at the end of the month, meaning any new deal would have to be in place by January 1.

If not, tariffs and quotas will apply and bureaucracy will increase, causing further damage to an economy already ravaged by coronavirus.