The UK has demanded “realism” from the European Union as crunch talks on a post-Brexit trade deal resumed in Brussels.

The EU’s chief negotiator Michel Barnier said the bloc remains “determined” and “patient” but stressed the need for future competition between the 27 member states and the UK to be fair.

On the UK side, Downing Street said time is “very short” to reach a deal which could be implemented when transition arrangements expire at the end of the year.

The two sides – led by Mr Barnier and Boris Johnson’s Europe adviser Lord David Frost – are now working on draft legal texts, but key parts of the documents have not been agreed.

For months the major disputes have been over fishing rights, the “level playing field” arrangements aimed at preventing unfair competition on standards and state subsidies, and the legal mechanisms for governing the proposed treaty.

Despite some signs of progress – not least the fact that talks are continuing – it is clear that major concessions will be needed if an agreement is to be reached.

The Prime Minister’s official spokesman said: “The discussions will be based on our largely common draft treaty texts.

“But significant differences do remain and key elements in the draft texts are not yet agreed.

If we are to make further progress in the coming days, we need to see more realism from the EU on what it means for the UK to be an independent state

“What we are working to do is seek solutions that fully respect UK sovereignty.

“Negotiators have been in contact almost every day since October 22 and they are continuing to work intensively to bridge the gaps that remain between us.

“But, although there has been some progress in recent days, there is much work to be done and time is now very short.

“So if we are to make further progress in the coming days, we need to see more realism from the EU on what it means for the UK to be an independent state.”

The talks, which follow a similar round in London last week, come ahead of a European Council video summit on Thursday which has been touted as a deadline for a draft deal.

Mr Barnier tweeted on Monday morning: “We remain determined, patient, respectful.

“We want our future co-operation to be open but fair in all areas.”

Lord Frost said on Sunday: “We are working to get a deal, but the only one that’s possible is one that is compatible with our sovereignty and takes back control of our laws, our trade, and our waters.

“That has been our consistent position from the start and I will not be changing it.

The UK remains a member of the single market and customs union until the end of the year, when major changes to trading arrangements will take place with or without a deal.

If no agreement is in place at the end of December, goods travelling between the two parties will be subject to tariffs set out by the World Trade Organisation.

Time is running short to reach a new deal because of the need for it to be ratified by both sides by December 31.

The agenda for Thursday’s meeting of 27 European leaders does not mention Brexit, with the response to the Covid-19 pandemic instead taking centre stage.

But with only one other meeting – between 10-11 December – scheduled before the end date of the transition period, this could be seen as a key moment in the shaping of the UK’s departure.

European Commission spokesman Eric Mamer played down the impact Mr Johnson’s coronavirus self-isolation would have on the talks, pointing out that he had been in phone contact with Ms von der Leyen throughout the process.

“We wish the Prime Minister well. We know how difficult it is for leaders to continue to conduct business in the current circumstances,” he told reporters in Brussels.

“There are and there have been regular contacts in any case by phone between the president of the commission and the Prime Minister, so I’m sure they will continue to have these contacts.”

Ireland’s foreign affairs minister Simon Coveney warned that talks on a post-Brexit trade deal will collapse if no progress is made on fishing.

“What the British Government have promised to their fishing industry, versus what Michel Barnier’s negotiating mandate from the EU is, there’s a very, very wide gap,” he said.

“It’s not good. That’s the truth of it. These negotiations are not in a good place when it comes to fishing.”