The EU and Britain on Friday traded blame for the lack of progress after the latest round of post-Brexit trade talks, with Brussels warning that a deal looked unlikely.

The EU’s chief negotiator Michel Barnier lodged his warning at the close of the seventh round of trade talks, which again got stuck on key issues, mainly fishing rights and competition rules.

Hundreds of negotiators met over several days in the Belgian capital with both sides acknowledging a sliver of progress on technical issues -- but not on the main obstacles.

“Those who were hoping for negotiations to move swiftly forward this week will have been disappointed,” Barnier told reporters after the talks ended.

“And, unfortunately, I too am frankly disappointed and concerned and surprised as well,” he added.

His UK counterpart David Frost countered that Brussels’ insistence that London meet EU demands on state aid and fisheries policy before work on other areas made it “unnecessarily difficult to make progress”.

Frost reiterated that he thought a deal remained possible and was Britain’s aim but he warned: “It is clear that it will not be easy to achieve.”

 Barnier said that “too often this week it felt as if we were going backwards rather than forwards.” “At this stage an agreement between the UK and European Union seems unlikely.

“I simply do not understand why we are wasting valuable time,” he said.

Both sides are pushing to have a deal in place by the end of a post-Brexit transition period which ends on December 31.

The Europeans said this requires an agreement by October, leaving just two more months to find common ground.

If no deal is struck, ties will default to minimum standards set by the World Trade organisation, bringing higher tariffs and making onerous demands on business which threaten chaos on the cross-Channel border.

A European source said that Britain was pushing to delay negotiation on fishing and competition until as late as possible, a strategy that Brussels said was unacceptable.

“On these two pillars of a future agreement, the stalemate continues. You can’t keep moving forward on other issues when you have a gaping hole on the core issues,” the source said.

The next round of talks will be held in London September 7, with an EU summit planned for October 15-16 seen as the unofficial deadline for a deal.

A senior UK negotiating official said Frost would be in “close contact” with Barnier over the next couple of weeks before the next round of talks.

The euro, which hit two-year highs against the dollar this week, fell on Friday as data showed eurozone economic activity slowing in August against a backdrop of rising coronavirus cases.

The pound also fell against the dollar as the EU and Britain traded blame for the lack of progress after the latest round of post-Brexit trade talks, with Brussels warning that a deal looked unlikely.

Sterling is being punished “by Brexit talks which seem to be going nowhere,” said Neil Wilson, analyst at Markets.com.

“The two sides are still far from reaching agreement on key terms” of their post-Brexit relationship.

In the eurozone, IHS Markit’s closely-watched PMI index fell to 51.6 points from 54.9 points in July, although that was still above the key level of 50 points that indicates growth.

“The euro’s rally has come to a halt this week on growing concerns that coronavirus is coming back strongly in parts of Europe and will hurt the economic recovery,” said Fawad Razaqzada, market analyst with ThinkMarkets.

“In fact, economic activity has already slowed down according to the latest Purchasing Managers’ Indices from Germany and especially France, where COVID-19 cases have risen sharply since July.” European stock markets were in the red in afternoon trading, with London’s FTSE falling 0.5 per cent, Frankfurt’s DAX 30 shedding 0.9 per cent and Paris’s CAC 40 down 1.0 per cent.

On the other side of the Atlantic, Wall Street opened in slightly negative territory as investors took profit from sharp gains this week.

While vast central bank support has helped fan a surge in equities globally, economic data showed that 1.1 million Americans made new claims for unemployment benefits last week, reinforcing concerns about the world’s biggest economy.

However, observers said the reading could give warring lawmakers in Washington the kick-start they need to agree a new rescue package, having failed to reach a consensus after two weeks.

 There is some optimism nevertheless that a vaccine can be found.

Pfizer and BioNTech SE said a vaccine they are working on could be up for regulatory review by October and, if all goes well, the jab could be ready to roll out as soon as November.

While massive financial support from central banks and governments has been crucial to helping economies, a vaccine for a disease that has killed nearly 800,000 people and infected more than 22 million is seen as paramount.

Agencies