The European Union will be “creative” to reach a trade deal with the UK but will not allow a “downward competition” in standards, Ursula von der Leyen said.

The European Commission chief told MEPs that the UK and EU should “advance together” towards higher standards.

The UK is resisting the so-called “level playing field” demands because of concerns it could leave Britain tied to rules set by Brussels on issues including workers’ rights, environmental protections and state subsidies.

Updating the European Parliament after talks with Boris Johnson on Monday, the commission president said that the bulk of the work on a deal still needed to be done with time running out before the end-of-year deadline.

She said while the EU was open to extending the transition period beyond December 31 “it needs two to tango” and the UK had ruled it out.

“This means that we are now half-way through these negotiations with five months left to go.

“But we’re definitely not half-way through the work to reach an agreement.

“With little time ahead of us, we will do all in our power to reach an agreement, we will be constructive as we’ve always been and we’re ready to be creative to find common ground where there even seems to be not.”

The major stumbling blocks to a deal include access to fishing waters, the level-playing field conditions and the role of the European Court of Justice.

On the issue of the level-playing field, Ms von der Leyen told the European Parliament the issue was “fair” competition.

“It cannot be a downward competition.

“Just think of labour standards or environmental protection.

“It should be a shared interest for the European Union and the UK to never slide backwards and always advance together towards higher standards.”

On fisheries, she said no one questioned the UK’s sovereignty over its waters but “we ask for predictability, and we ask for guarantees for (EU) fisherman and fisherwomen who’ve been sailing in those waters for decades”.

And she said “we expect a role for the EUropean Court of Justice where it matters” in the deal.

The UK has accused the EU of seeking to impose conditions in the trade deal that it has not insisted on in other agreements.

But the commission president said: “These are our objectives, not only in our discussions with the UK but in any relationship with any partner.

“Because these are principles at the heart of the European Union – fair competition, rising social standards, the protection of our citizens and the rule of law.

“This is who we are and it is not going to change.”

On Tuesday, Cabinet Office Minister Michael Gove told MPs at Westminster that the UK was “ready to be flexible” to reach a deal.

The Prime Minister hopes an agreement can be struck by the end of July, with negotiators meeting weekly in the hope of a breakthrough.