By Gabriela Baczynska and Elizabeth Piper
BRUSSELS/LONDON (Reuters) - British Prime Minister Boris Johnson and the European Union's chief executive gave themselves until Sunday for last-ditch negotiations on a post-Brexit trade deal after failing to narrow differences during a "frank discussion" over dinner in Brussels.
"Very large gaps remain between the two sides and it is still unclear whether these can be bridged," a senior source in the British prime minister's office said in a statement.
He said Johnson did not want to leave "any route to a possible deal untested", and so he and European Commission President Ursula von der Leyen had agreed to further discussions over the next few days between their negotiating teams.
Von der Leyen echoed the British comments on the meeting in a separate statement.
The two sides agreed that a decision on whether a deal is possible before Britain finally leaves the EU's orbit on Jan. 1 would be taken by the end of the weekend.
Fears are running high of a chaotic no-deal finale to the five-year Brexit crisis.
The EU and Britain had cast Thursday's meeting as a chance to break an impasse in negotiations but both acknowledged there was a danger that a trade deal would elude them.
Britain formally left the bloc in January, but has since been in a transition period during which it remains in the EU single market and customs union, meaning that rules on trade, travel and business have stayed the same.
That ends on Dec. 31. If by then there is no agreement to protect around $1 trillion in annual trade from tariffs and quotas, businesses on both sides will suffer.
Earlier Johnson said Brussels wanted Britain to comply with new EU laws in the future or be automatically punished, and was insisting it give up sovereign control over its fishing waters.
"I don't believe that those are terms that any prime minister of this country should accept," he told the British parliament, to cheers from lawmakers in his Conservative Party.
Johnson said "a good deal" could still be done if the EU scrapped its demands, but Britain would prosper with or without a trade deal, a phrase he repeated as he left for Brussels.
Failure to agree a deal would snarl borders, shock financial markets and sow chaos through supply chains in a world already grappling with the economic cost of COVID-19.