Prime minister Boris Johnson and European Commission president Ursula von der Leyen are set to meet for face-to-face talks later this week in an effort to pull off a Brexit trade deal.
The pair spoke by phone in a lengthy call on Monday in their second such conversation in 48 hours as negotiations between the UK and the EU faltered.
They are likely to meet in person in Brussels on Wednesday or Thursday, which would be their first face-to-face encounter since January.
Hurdles remain to securing an agreement before the Brexit transition period runs out at the end of this month, as warnings continue to sound about the impact of leaving without a trade deal.
In a joint statement, Johnson and von der Leyen pointed out that there are “significant differences on three critical issues” – the level playing field, governance and fisheries.
In an olive branch to Brussels, the British government said it was prepared to remove three controversial clauses from the UK Internal Market Bill relating to the Irish border.
The UK leaves the single market and customs union at the end of December and businesses already face major changes to their trading relationship with the EU from 1 January.
Failure to reach a deal would add additional barriers and tariffs, and the Office for Budget Responsibility has warned the disruption could wipe 2% off gross domestic product in 2021.
Any deal would have to be ratified by both Houses of Parliament in the UK and the European Parliament, as well as signed off by EU leaders.
Watch: Why is fishing so important in Brexit talks?