The chances of an agreement with the EU on a post-Brexit trade deal are “less than 50%”, Cabinet Office Minister Michael Gove has said.

As negotiations between the two sides continued, Mr Gove told the Commons Brexit Committee the “most likely outcome” was that the current transition period would end on December 31 without a deal.

He told MPs: “I think, regrettably, the chances are more likely that we won’t secure an agreement. So at the moment less than 50%.”

Mr Gove also said the Government will not seek to negotiate a fresh trade agreement with the EU next year if they cannot reach a deal before the end of the Brexit transition period.

He said that December 31 was a “fixed point in law” when the transition must end.

“That would be it. We would have left on WTO (World Trade Organisation) terms,” he added.

“It is still the case of course that there would be contact between the UK and European nations and politicians as one would expect.

“But what we would not be doing is attempting to negotiate a new deal.”

Mr Gove said that though talks with the EU had made progress, “significant” differences between the two sides remained.

“The process of negotiation has managed to narrow down areas of difference. It is certainly the case that there are fewer areas of difference now than there were in October or indeed July,” he said.

The European Parliament set down a three-day deadline for post-Brexit trade deal negotiators to strike a deal, warning that MEPs will not have time to ratify an agreement this year unless it is ready by Sunday night.

Presidents of the parliament’s political groups said it was ready to organise a plenary session by the end of the month, but on condition that “an agreement is reached by midnight on Sunday December 20″.

EU chief negotiator Michel Barnier, who has been holding talks with the UK team led by Lord Frost, said there had been “good progress” but the “last stumbling blocks remain”.

He said: “We will only sign a deal protecting EU interests and principles.”

The talks were given the green light to continue on Sunday following a meeting between Boris Johnson and European Commission president Ursula von der Leyen.

The House of Commons rises for Christmas at the close of Thursday’s business but MPs have been put on standby to be recalled if a trade deal is secured.

Mr Gove told MPs: “Intensive talks are ongoing with both negotiating teams working day and night to reach a deal.

“We’re going the extra mile in continuing the negotiations to see whether or not an agreement can be reached and we will continue to keep Parliament informed on our progress.”

He added: “Even if sometimes results are coming later than we might have wanted, I know we will be doing everything in order to secure a good free trade agreement in the interests of the whole United Kingdom.”

Mr Gove said if there is a deal “we will request that the House returns in order to make sure that we can legislate effectively, and we believe we can pass the necessary legislation before December 31 to give businesses legal certainty for the future”.

Downing Street said they did not believe it would be necessary to require MPs to sit on Christmas Day.

“Obviously we wouldn’t be looking for the House to sit on Christmas Day and the bank holidays around it. We would obviously try to avoid those days,” the Prime Minister’s official spokesman said.