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Talks between No10 and Labour reached another stalemate tonight but are set to resume next week.

A source said negotiators “discussed the process going forward”, but the two sides were deadlocked over a customs union with the EU.

It is understood Downing Street is still refusing to “move off its red lines” despite mounting calls to smash the impasse.

Theresa May ’s effective deputy David Lidington and Environment Secretary Michael Gove took part in the talks for the Government side, while Shadow Chancellor John McDonnell and Shadow Brexit Secretary Sir Keir Starmer was representing Labour .

Chancellor Philip Hammond said fighting the European Parliament elections would feel like a “pointless exercise”.

(Image: REUTERS)

He told the BBC: “Clearly nobody wants to fight the European elections - it feels like a pointless exercise.

“The only way we can avoid that is by getting a deal agreed and done quickly and if we can do that by May 22 then of course we can avoid fighting European parliamentary elections.

“But in any case we want to ensure any British MEPs that are elected never have to take their seats.”

Shadow Chancellor Mr McDonnell said discussions with Cabinet ministers Mr Lidington and Environment Secretary Michael Gove had been “positive” and “constructive”.

(Image: PA)

The meeting between Mr McDonnell, members of Jeremy Corbyn ’s staff and Mr Gove and Mr Lidington lasted just over an hour.

Asked if the government had shifted on its “red lines”, Mr McDonnell said: “I’m not going into the detail of it.

“We are trying to be as constructive as we possibly can on all sides... But we will see by the end of next week how far we have got.”