The Democratic Unionist party (DUP) has quashed speculation about a deal to break Northern Ireland’s political deadlock and restore power sharing before Christmas. Party sources on Monday signalled that talks with the UK government over post-Brexit trading arrangements needed more time and would continue in the new year. There had been hopes of a breakthrough this week to end the DUP’s 22-month boycott of the Stormont executive and assembly. But a party spokesperson ruled out an imminent deal, saying: “The DUP is condition-led, not calendar-led.” The statement all but extinguished suggestions that the party leader, Jeffrey Donaldson, was about to end a political vacuum that has left civil servants to run Northern Ireland. DUP sources as well as British and Irish officials have expressed optimism there will be a deal soon. The DUP collapsed Stormont in February 2022 in protest at checks on goods entering Northern Ireland from Great Britain that it said undermined the region’s position in the UK. Rishi Sunak’s Windsor framework alleviated some but not all DUP concerns, leading to months of talks that both sides agree are nearing a conclusion. One mooted concession is changing labelling to mark goods as “for sale in Scotland, England and Wales” rather than “for sale in the UK only”. Such tweaks are expected to fall well short of seven tests set out by the DUP, giving Donaldson a challenge to sell the deal to a fractious party. Most of the party’s assembly members are believed to favour reviving Stormont. A fiscal crisis, crumbling public services and strikes have intensified calls for a restoration of power-sharing. But DUP hardliners, including MPs such as Ian Paisley, want all traces of an Irish Sea border eliminated. Donaldson also faces pressure from outspoken loyalists and a party rival, the Traditional Unionist Voice, which was accused of erecting posters over the weekend that said “stop DUP sellout”. Donaldson responded: “I will not be intimidated or distracted by such shadowy behaviour any more than similar behaviour I have faced in the past by republicans.” Last week, the Northern Ireland secretary, Chris Heaton-Harris, offered a £2.5bn financial package to the region on condition that the executive is revived. He was to meet Donaldson and the leaders of Sinn Féin, Alliance and the Ulster Unionist party on Monday to discuss the package. It would include a new funding formula for public services and a lump sum to settle pay claims that have led to industrial action by education, health and transport workers.