Chief negotiators Lord Frost and Michel Barnier will conclude the final formal round of trade talks between the UK and the EU with a meeting against the backdrop of legal proceedings.

They will close a week of post-Brexit talks in Brussels with a meeting on Friday after the European Commission launched action against the UK after the Government refused to withdraw plans to override key elements of the Brexit divorce settlement.

Both the UK’s Lord Frost and his EU counterpart have said they need to reach an agreement this month for a deal to be in place by the time the transition period ends on December 31.

On Thursday, Commission president Ursula von der Leyen said a “letter of formal notification” would be sent to the UK after ministers rejected a demand to withdraw the provisions from the controversial UK Internal Market Bill by Wednesday.

She said the move marked the first step in an “infringement procedure”, with the British Government now invited to send its observations within the month.

“This draft Bill is by its very nature a breach of the obligation of good faith laid down in the Withdrawal Agreement,” she said.

“The deadline lapsed yesterday, the problematic provisions have not been removed, therefore the commission has decided this morning to send a letter of formal notice to the UK Government.”

Mrs von der Leyen gave no indication as to what action could follow if the Commission did not receive a satisfactory response, although under the terms of the Withdrawal Agreement the EU could take Britain to the European Court of Justice.

A Government spokesman said they would respond to the letter “in due course”.

The Government has argued the Bill – which gives ministers the power to override provisions in the Withdrawal Agreement relating to Northern Ireland – is necessary to protect the peace process if there is no agreement on a post-Brexit free trade agreement.

However the move infuriated the EU which accused the UK of violating its treaty obligations after ministers admitted it would breach international law.

Nevertheless, the EU response suggests it is in no hurry to escalate the dispute while talks on a free trade agreement are continuing.

UK officials insist the proceedings adopted by the Commission are relatively common, with around 800 open cases against member states last year alone.

A UK Government spokesman said: “We have clearly set out our reasons for introducing the measures related to the Northern Ireland protocol.

“We need to create a legal safety net to protect the integrity of the UK’s internal market, ensure ministers can always deliver on their obligations to Northern Ireland and protect the gains from the peace process.”

Labour leader Sir Keir Starmer said: “A deal can be done here, the issues that are there are quite capable of being resolved.

“Both sides need to sit down, resolve them, get a deal.

“That’s in the national interest – it’s in our interest and the EU’s interest.”

Despite the legal action, Downing Street said trade talks with the European Union were being carried out in a “constructive spirit”.