Britain must give away some sovereignty to secure free trade with the EU but Europe’s leaders will intervene in the negotiations in the autumn with the aim of sealing a compromise deal at a summit on 15 October, Germany’s ambassador in Brussels has said. Michael Clauss, whose country will take over the rolling presidency of the EU for the second half of the year, said there had been “no real progress” in the talks so far but predicted they would become the EU’s main political focus in September and October. “Is a deal possible? Yes, definitely. But I think it also means that UK needs to have a more realistic approach,” Clauss said at an event hosted by the European Policy Centre thinktank. “To put in short, I think you cannot have a full sovereignty and, at the same time, full access to the internal market. So this Brexit issue is going to absorb a lot of political or most of the political attention we expect in September and October.” The signal that the EU’s 27 heads of state and government are prepared to turn their focus to the stalling talks will be a boost to Downing Street, where officials have emphasised the need for a resetting of Michel Barnier’s negotiating position. The two sides are in a stalemate on access for European fishing fleets to UK waters and whether in return for a zero-tariff trade deal Britain needs to tie itself to the EU’s developing state aid rules and common environmental, social and labour standards. British negotiators have voiced fears that the talks have fallen down the EU agenda, with UK officials repeatedly calling for political involvement to break the stalemate. Clauss said that the last few months of 2020 would be “dominated” by the talks, and Berlin regarded securing a deal as a top priority alongside agreeing on the EU’s pandemic recovery fund. A greater cause of concern will be the German ambassador’s insistence that a trade deal will require the abandonment of the UK’s sovereign right to set its own domestic laws without recourse to Brussels. In contrast, Barnier has repeatedly rejected British claims that the trading away of sovereignty is implicit in the EU’s stance on standards and rules on subsidies to business. Clauss, who as Angela Merkel’s key representative in Brussels is key figure in communicating Berlin’s position on the negotiations to Barnier, said Ursula von der Leyen, the European commission president, Charles Michel, the president of the European council, and Boris Johnson would meet this month to take stock. “So far as all of you are aware, no real progress has been made in the negotiation. It’s more like both sides, highlighting and stating their positions,” he said. “As you know, the issues are the future access of the United Kingdom and its companies to the internal market, which are connected to the issue of level playing field: do they have to apply ... state aid, and environmental standards and so on and so on, or not? “Another issue that is very important for some member states is the issue of fish quotas – in these countries it has a high visibility. This means whether EU member states keep their fish quotas – fish in the UK waters after Brexit has been done – and then another issue of governance. So, what if there is a disagreement on how to read the treaty and what can be done? “We hope that we will have a deal by the European council [summit of leaders] in October, and confirm,” the ambassador said. “That means we envisage to be there around the second half of October. We cannot be much later because [the deal] would need to be ratified at least by the European parliament, which needs some time.” Meanwhile Labour has said it will be holding the government’s feet to the fire on its Brexit promises insisting it will not let it away with a deal that will wreck the economy further just because of its hard Brexit line. “That commitment to an “ambitious, broad, deep and flexible partnership” is what the country expects and deserves,” said Rachel Reeves the shadow chancellor of the Duchy of Lancaster. As Michael Gove’s opposite, she is now the key figure in the party, on the Brexit portfolio, previously held by Keir Starmer. “We have left the EU, but need a future relationship with our European neighbours that safeguards jobs and businesses, maintains environmental and employment standards and provides a close security partnership to keep people safe,” she said. She said this weeks talks were a “key step in the government delivering what it promised at the general election in December with the Prime Minister’s ‘oven-ready deal’”.