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The European Union’s chief Brexit negotiator Michel Barnier today threatened to pull the plug on a transitional period that business leaders say is vital to save British jobs after Brexit.

He said a deal was “not a given” unless the UK gave way on three issues, including keeping EU rules for the sake of avoiding a hard border in Ireland.

In a sour atmosphere, Mr Barnier slapped down Brexit Secretary David Davis for calling the EU “discourteous” in putting up new demands for talks.

And he said Britain had to sign up to stipulations from the 27 remaining EU states if it hoped to strike an agreement on the transitional period in March. He added: “If these disagreements persist the transition is not a given.”

The pound dipped during his Brussels press conference, suggesting investors were alarmed by the increasingly bellicose language.

Mr Barnier said the “time for choices” had arrived, adding: “I do not understand some of the positions of the United Kingdom.”

Earlier talks towards the future trade deal were cancelled despite British negotiators travelling to Brussels. Mr Barnier blamed a “diary clash”.

Three “substantial” disagreements were holding up talks, said Mr Barnier.On the northern Ireland border, he said full alignment with EU regulations must be guaranteed in a legal text —which UK Brexiteers would not agree.

Mr Barnier claimed Britain’s proposals to avoid border checks were too vague: “Any solution must be precise, clear and unambiguous.” He added: “It is important to tell the truth. A UK decision to leave the single market and to leave the customs union would make border checks unavoidable.”

On EU citizens’ rights he insisted that anyone arriving during the transition period must have lifelong rights to live and work in the UK.

He also criticised Britain’s position on EU justice and home affairs laws.

Meanwhile European Union diplomats are warning that any agreement on a post-Brexit transition period could be delayed to summer if Britain objects to terms drafted by Brussels.

The prospect of missing the original target of announcing a deal next month alarmed business leaders. Unless a deal is agreed by a summit next month, the next summit is not due until June.

“We are not tied up to this deadline,” said one senior EU official. “This is a self-imposed date.”

Adam Marshall, director general of the British Chambers of Commerce, said he believed the EU was “sabre-rattling” but warned any delay would be damaging. “Businesses on both sides of the Channel want clarity as soon as possible about the short-to-medium terms of trade,” he said.

A UK Finance spokesperson said: “It is crucial and urgent for businesses that a definitive transition period is agreed by the UK and EU 27 governments in advance of the March European Council meeting.”