The EU’s Brexit negotiator Michael Barnier has warned that a transition period after the UK leaves the union in March 2019 is not guaranteed.
Speaking to reporters on Friday, he pointed out "substantial disagreements" between the British and European sides on matters such as freedom of movement during any such period.
"If these disagreements persist, the transition is not a given," Mr Barnier said. “Time is short, very short. We haven't a minute to lose if we want to succeed."
Mr Barnier was speaking as a week of Brexit talks winds up.
Discussions this week focused on the transition arrangement that businesses want pinned down by the end of March and on the thorny issue of the Irish border.
The transition is intended to cover a period of around two years after Britain leaves the bloc, in order to give UK businesses longer to prepare for the historic split after 45 years of membership.
Mr Barnier insisted that the UK must apply new rules in the transition period, a statement which is likely to infuriate hardline Brexiteers who are determined to break free from Brussels’ regulatory orbit at the earliest possible opportunity.
"The UK has to accept all the rules and obligations until the end of transition. This is logical,” he said. It must also accept the consequences of leaving the EU's institutions and policies."
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It came after a document from the EU released on Wednesday threatened to punish Britain with sanctions if it breaks rules during a transition period after leaving the bloc.
The legal text said that the EU would be allowed to ground flights and suspend single market access and impose trade tariffs if the UK breaches the terms of any departure deal.
Eurosceptics in the Conservative Party reacted angrily to the move, describing it as part of a series of “silly threats” from Brussels.
Mr Barnier also said that leaving the customs union and single market will make border checks at the Irish border “unavoidable”.
Any solution to the border issue must be “precise, clear and unambiguous”, he continued.
The fall-back option on the Irish border - that Northern Ireland will remain aligned with the EU to avoid a hard border - will be included in the legal text, he said.
In an indication that the timeframe for a Brexit deal is slipping, Mr Barnier said the EU is aiming for October or November for a withdrawal agreement.
“We await with great interest the choices to be made by the British government,” he said.
