MPs were warned they could be recalled from the Christmas recess next week if a post-Brexit trade deal is secured with the EU, as Brussels chief Ursula von der Leyen said there is a “path” to an agreement.

Downing Street said that the House of Commons will break on Thursday but put parliamentarians on notice to return at haste in the event of a breakthrough in negotiations with as little as 48 hours notice.

“Parliament has long shown it can move at pace and the country would expect nothing less,” No 10 said.

Time is running out to secure a trade deal by the end of the transition period on December 31, with a failure to broker one meaning businesses will face punishing tariffs when dealing with the bloc.

European Commission president Ms von der Leyen raised hopes of a breakthrough, but conceded the route to an agreement is “very narrow” and resolution of the difficulties over fishing may prove impossible.

But she indicated that progress has been made on measures to prevent either side unfairly competing with the other by cutting standards or using state subsidies.

Downing Street said that with time in “short supply”, all the legislation should be in place by Thursday for an exit without an EU trade deal, which it insists is “the most likely outcome” despite acknowledging there has been “some progress”.

A spokesman said that, subject to the approval of the House, the Commons would go into recess on Thursday “but with the knowledge that we will recall MPs and Peers to legislate for a deal if one is secured”.

“The process for recall will align with the process for finalising the legislation for a deal, if one is secured, and no time will be lost,” he added.

“We realise that this duty falls not just on MPs and Peers, but on the parliamentary staff that make Parliament function, to whom we are very grateful.”

Mrs von der Leyen had told MEPs that the next few days would be “decisive” and added there is a “path to an agreement now”, although it is “very narrow”.

She said that progress in the “level playing field” could mean the EU being allowed to act “autonomously” in retaliation if the UK flouts subsidy rules.

There has also been agreement that Mr Johnson will not undercut existing common labour and environmental standards, she said.

But difficulties remain over what happens in the future if either side changes its rules.

Mr Johnson has said no prime minister could accept a situation where Brussels could automatically impose punitive measures if it changes its regulations and the UK fails to follow suit.

However, it is on fishing where the two sides remain furthest apart, Mrs von der Leyen said.

She said that “as things stand I cannot tell you whether there will be a deal or not”.

“On standards, we have agreed a strong mechanism of non-regression. That’s a big step forward,” she added.