BRUSSELS: European Union Brexit negotiator Michel Barnier said on Friday that "just a few hours" remained for negotiations to reach a new trade deal with Britain, with disagreements over fishing rights clouding the prospects of a deal.

Speaking to the European Parliament, Barnier said the talks have now become "extremely difficult" over agreeing how the EU could retaliate if Britain backpedalled on production standards to win a competitive edge for its products, or if Britain cut European fishermen off from its fishing waters in the future.

"It's the moment of truth. We have very little time remaining, just a few hours to work through these negotiations in a useful fashion if we want this agreement to enter into force on the first of January," Barnier said.

"There is a chance of getting an agreement but the path to such an agreement is very narrow," he said before excusing himself for what he described as "last attempt" talks with his UK counterpart, David Frost, nearby in Brussels.

"We find ourselves in a very serious and sombre situation."

While Barnier said the sides were striving at an agreement, he said the 27-nation bloc would not sign a deal that would undercut its cherished single market of 450 million consumers.

He said the EU needed to be able to impose trade barriers should the UK change its regulations to offer substandard goods on the bloc's market.

For fisheries, he said the bloc also wanted to be free to retaliate by curbing EU market access to UK fish products should Britain squeeze the European ships out of its waters.

"That is where we get to one of the most difficult issues at the moment. Fisheries being part and parcel of the trade relationship," said Barnier, adding he did not know if the talks would yield a deal, or not. "We have to be prepared for all eventualities."