Labour's hopes of landing a controversial Brexit 'reset' deal aligning the UK closer to Brussels before the next election could be scuppered amid a major row over trade.

The two sides are at loggerheads over a 'made in Europe' law currently going through the European Parliament that designed to protect the continent's manufacturing from global competition, especially from China.

The UK wants to be included in the scheme, which would give EU firms priority for public contracts and subsidies.

Concerns have been raised that UK industries including car manufacturing and steel would suffer if the plan shut out British firms that trade across the UK-EU border.

Labour is said to have offered to cut tuition fees for EU students at UK universities, putting them on a par with those paid by domestic students, as a sweetener.

The Burnham government is also prepared to lift the cap on a proposed youth mobility scheme, giving visa-free access to Britain for up to 100,000 under 30s.

But the EU is said to be demanding those concessions form part of the wider reset, saying it is not possible for the UK to join the 'made in Europe' scheme.

A summit originally penciled in for July has been pushed back to November at the earliest and the EU has threatened to wait until it finds out who is PM after the next election.   

An EU diplomatic source told the Financial Times: 'If there is no summit this year then the EU calculation will be that it might be better to wait for the British election in 2029.

'You need a summit to create the pressure to solve the outstanding issues.'

Earlier this month Andy Burnham told French President Emmanuel Macron that the 'buy European' programme 'could pose significant challenges' for UK industry.

The Prime Minister also told MPs that ahead of a UK-EU summit, 'it is imperative, I believe, that we work hard to get a good deal for British steel, for British farming'.

A UK government spokesman said: 'We are fully committed to building a closer, more ambitious relationship with our European partners.'

'We continue to engage with the EU on 'Made in Europe' and work together, as like-minded partners, to boost growth and open up trade'..