The Telegraph understands that a meeting of UK and EU officials in London on Friday exposed a yawning divide between the two sides over the basis of the future relationship agreement.

The EU is insisting that the entire future relationship agreement - including trade, security and other agreements like fishing rights - should be “embedded in an overall governance framework” that covers “all areas” of cooperation.

EU sources say this is to create a nimble, “cross-cutting” dispute resolution mechanism that will enable the EU to hit Britain where it hurts if an independent arbitration panel finds that the UK is in breach of the Agreement.

“This is about fairness,” said a source familiar with EU thinking, “we need a mechanism where if the UK transgresses in an area where it is strong, and believes it can absorb the impact of a sanction, then the EU can take proportionate, reciprocal action in a sector that is equally important to the UK - or vice-versa.”

However the British side is understood to have been adamant that it wants only a set of separate, basic agreements - from trade to security, fish to financial services - with each one having its own separate governance mechanism and no cross-cutting punishments.

They reject EU arguments that the “size and proximity” of the UK, and the depth of necessary relationship, means that it cannot be treated like Canada or Japan which have much more distant, light-touch dispute resolution mechanisms.

British negotiators, led by David Frost, are also determined to avoid a repeat of the first phase of talks where the EU retained leverage over the process by refusing to even talk about a trade deal until the UK had settled an agreement on finances, citizens’ rights and the Irish border.

In a statement to Parliament this week Mr Johnson hinted at the new UK approach by warning that “early progress” on areas like data-sharing and equivalence in financial services regimes would be “a test of the constructive nature of the negotiating process”.

But internal discussions on the European side are clear that even if unilateral EU assessments on data-sharing and financial services are completed by the summer, a decision will not come until much later in the year, once the EU has seen how rest of the negotiation is progressing.

The gulf between the two sides has now left officials in both London and Brussels fearing that talks could break down as early as this April, the Telegraph understands.