There remain “serious” differences between the UK and EU after the first round of trade talks, the bloc’s chief negotiator has said.
Michel Barnier said “very difficult” areas needed to be resolved, but a “good agreement for both sides” remained possible.
He said there were disagreements over competition rules, police co-operation, and how a deal would be enforced.
He also dismissed UK proposals on fishing as “impractical”.
Speaking to reporters in Brussels at the end of this week’s first round of trade negotiations, he said points of difference had “come as no surprise”.
Talks will move to London later this month for the second round. Both sides set out their respective positions in opposing strategy documents last month.
The UK has warned it will walk away from trade talks in June, when both sides are due to review progress, unless there is a “broad outline” of a deal.
The post-Brexit transition period, under which the UK will continue to follow EU rules, will end in December and Prime Minister Boris Johnson has vowed not to extend it.
Mr Barnier warned the UK against under-estimating the challenges posed by the end of the transition, which he said would be “very different” to those which accompanied the UK’s exit from the bloc at the end of January.
Reaching a deal over fishing is likely to prove an early flashpoint in trade talks, with both sides having pledged to find a solution before July.
Mr Barnier said the UK’s proposal to hold annual talks over access to its waters, as the EU does with Norway, was “totally impractical”.
“There’s a hundred species or so. What we can do with Norway on five species simply isn’t possible for 100 species,” he added.
Instead, the EU wants to “uphold” existing access to British waters for vessels from member states, to avoid “economic dislocation” for their fishermen.