Boris Johnson described Brexit trade talks as being in a 'serious situation'

During the call, the Prime Minister told Ms Von der Leyen that "time was very short and it now looked very likely that agreement would not be reached unless the EU position changed substantially", Number 10 said.

The Downing Street spokesperson added: "He said that we were making every effort to accommodate reasonable EU requests on the level playing field, but even though the gap had narrowed some fundamental areas remained difficult."

The spokesman said Mr Johnson said the EU's position on fisheries was "simply not reasonable" and for an agreement, it "needed to shift significantly".

"The prime minister repeated that little time was left," the spokesperson said.

"He said that, if no agreement could be reached, the UK and the EU would part as friends, with the UK trading with the EU on Australian-style terms.

"The leaders agreed to remain in close contact."

Earlier in the day MPs were told chances of an agreement were less than 50 per cent before Parliament broke for the Christmas break

Cabinet Office Minister Michael Gove told the Commons Brexit Committee the “most likely outcome” was that the current transition period would end on December 31 without a deal.

He told MPs: “I think, regrettably, the chances are more likely that we won’t secure an agreement. So at the moment less than 50 per cent.”

The House of Commons rose for Christmas at the close of Thursday’s business but MPs have been put on standby to be recalled if a trade deal is secured.

Mr Gove said the Government will not seek to negotiate a fresh trade agreement with the EU next year if they cannot reach a deal before the end of the Brexit transition period.

He said that December 31 was a “fixed point in law” when the transition must end.

“That would be it. We would have left on WTO (World Trade Organisation) terms,” he added.

“It is still the case of course that there would be contact between the UK and European nations and politicians as one would expect.

“But what we would not be doing is attempting to negotiate a new deal.”

Mr Gove said that though talks with the EU had made progress, “significant” differences between the two sides remained.

“The process of negotiation has managed to narrow down areas of difference. It is certainly the case that there are fewer areas of difference now than there were in October or indeed July,” he said.

The European Parliament set down a three-day deadline for post-Brexit trade deal negotiators to strike a deal, warning that MEPs will not have time to ratify an agreement this year unless it is ready by Sunday night.

Presidents of the parliament’s political groups said it was ready to organise a plenary session by the end of the month, but on condition that “an agreement is reached by midnight on Sunday December 20″.

EU chief negotiator Michel Barnier said there had been “good progress” but the “last stumbling blocks remain”.

He said: “We will only sign a deal protecting EU interests and principles.”