EU negotiator Michel Barnier warned Friday that there were "substantial disagreements" with Britain on a post-Brexit transition period and that a deal was not guaranteed.
"If these disagreements persist, the transition is not a given," Barnier told a news conference in Brussels after a round of Brexit talks with British negotiators.
Barnier said deep divisions remained on citizens rights for EU migrants moving to Britain during the proposed 21-month transition as well as the UK's ability to object to new laws passed during the phase.
Barnier added that he "wasn't talking about a threat" but "if this disagreement were to persist there would undoubtedly be a problem, I hope we would be able to resolve those disagreements in the next round" of talks.
Britain hopes to agree by an EU summit at the end of next month on a transition period lasting from its departure from the bloc in March 2019 to the end of 2020, during which it will still follow EU laws in exchange for access to the single market.
The former French minister also hit back at comments made by his UK counterpart David Davis, who was not in Brussels, that the European Union was acting in bad faith and had been "discourteous".
Barnier said that he did not understand the angry British reaction to a draft EU transition agreement that contained sanctions for Britain if it breached the terms of the deal, including freezing its single market access.
"There is no desire to punish," Barnier said, adding however that it was standard for international agreements to have a "serious and effective" enforcement mechanism.
Britain and the EU held talks this week on plans for the transition period after Brexit.
A draft EU agreement published on Wednesday calls for the ability to sanction Britain in cases in which it would take too long to refer any breach of those rules to the EU's top court.
That could include reimposing tariffs or customs checks, both of which Britain is supposed to be free of as a member of the EU internal market during the transition to December 2020.
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