British Prime Minister Boris Johnson and European Commission President Ursula von der Leyen instructed their negotiators to resume trade talks on Sunday in a last ditch attempt to bridge significant differences.
Britain left the European Union on Jan. 31 but rules governing trade, travel and business have remained unchanged during a transition period which ends on Dec. 31, when a new relationship will be established - with or without a deal.
The two leaders said that while "recognising the seriousness" of their significant differences, "we agreed that a further effort should be undertaken by our negotiating teams to assess whether they can be resolved".
"No agreement is feasible if these issues are not resolved," they said. "We are therefore instructing our chief negotiators to reconvene tomorrow in Brussels. We will speak again on Monday evening."
The decision to proceed with trade talks, which have all but stalled over fisheries, fair competition rules and governance, means they hold out hope that the two sides can close those persistent gaps.
If the two sides fail to reach a deal, the five-year Brexit divorce will end messily just as Britain and Europe grapple with the vast economic cost of the COVID-19 outbreak.
British and EU negotiators paused trade talks on Friday to call in their leaders to try to narrow the gaps and get an agreement after a week of negotiations failed to bridge significant divergences between the two sides.
The talks were paused on Friday in the latest twist in months of negotiations which have barely moved on the three thorniest issues - fisheries, ensuring fair competition guarantees and ways to solve future disputes.
Sources from both sides said that French demands over fishing rights in British waters remained a key issue.