Britain and the EU have an understanding on what needs to be done to resolve issues surrounding the Northern Ireland Protocol but a deal is “by no means done”, Rishi Sunak has said.

Speaking during a question and answer session after his speech at the Munich Security Conference, the prime minister said Britain wanted to have a positive relationship with the bloc.

But he said that there were “real issues that need resolving”.

“The way that the protocol has been implemented, it’s causing very real challenges for families, for people, for businesses on the ground,” he said.

“We’re engaging in those conversations with the European Union all the time and we have been for a while, but what I’d say is there is still work to do.

“There are still challenges to work through. We have not resolved all these issues.

“No, there isn’t a deal that has been done, there is an understanding of what needs to be done.”

Mr Sunak added that “we’re working through (the issues) hard and we will work through them intensely with the EU, but we are by no means done”.

It comes after Sinn Fein’s leader Mary Lou McDonald said “significant progress” had been made to resolve the row over the Northern Ireland Protocol and a deal is “very much game on”.

Speaking after discussions with Mr Sunak, who was in Northern Ireland on Friday to hold talks with political leaders, she told reporters: “We have always believed that a deal on the protocol was possible and we’ve always known it was necessary.

“It is clear that significant progress has been made and we are very heartened by that. We now want to see a speedy concluding of matters.

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“The bottom line is that we have to ensure that any deal provides for ongoing access to the European single market, no hardening of the border on the island of Ireland and a protection of the Good Friday Agreement in all of its parts.

“It seems to us that it’s very much game on.”

She said if these terms are reached it is then “a matter for everyone, for each of the political parties to step up, get back to work and deliver for people here in the north of Ireland”.

This is likely aimed at the DUP and other unionists, who have collapsed the Stormont assembly in protest over the protocol.

Mr Sunak travelled to Belfast, along with Northern Ireland Secretary Chris Heaton-Harris, to meet Stormont leaders amid mounting speculation a deal on post-Brexit trading arrangements could be days away.

After emerging from talks with Mr Sunak, DUP leader Sir Jeffrey Donaldson said while “progress has been made” on the Northern Ireland Protocol, there is “still some work required”.

He warned that “if and when a final agreement is reached, we will want to carefully consider the detail of that agreement and decide if the agreement does, in fact meet our seven tests”.

These “seven tests” were set out by the party in 2021 and include no new checks of any sort on goods being traded between GB and NI.

Asked if he will compromise on these tests for a deal to pass muster, Sir Jeffrey said it “is not a question of compromising”, but rather the “UK government honouring the commitments they’ve made”.

Rishi Sunak may not want to look like he is jumping the gun over new deal

Rob Powell

Political correspondent

@robpowellnews

Rishi Sunak very much downplaying reports that there could be a deal revealed as soon as Monday.

I guess the question is, whether that is an indication of genuine delays and problems and that there may not be something coming in the imminent future, or whether this is more strategy.

I think when you look at some of the choreography of the last few days, discussions going on in Belfast, the foreign secretary in Brussels yesterday, and meetings with EU leaders in Munich, it feels like there is something more substantial that is moving there.

So what may be going on, quite frankly, is an attempt not to sound too presumptuous in terms of revealing a deal without the DUP’s permission. Because of course, it is the DUP, unionist politicians in Northern Ireland, that really need to approve of this deal.

Because if they don’t, they will refuse to go back into power-sharing in Belfast and it means the democratic institutions, the executive, and the assembly there, won’t sit again.

So Rishi Sunak is trying to keep multiple audiences happy here, and that is potentially why he doesn’t want to sound too presumptuous or looking like he is jumping the gun in announcing any potential deal on the Northern Ireland Protocol.

The mechanism has left Northern Ireland without a devolved power-sharing executive since early last year.

The protocol has overshadowed Northern Irish politics since it was agreed upon as part of the Brexit deal in a bid to avoid a hard border on the island of Ireland.

Members of the unionist community are unhappy with the difficulties it creates for trade between Northern Ireland and Great Britain, with the DUP refusing to cooperate with forming a devolved Executive in Stormont until the issues are resolved.

What is the Northern Ireland Protocol and why does it matter?

The UK government says the protocol is not working and wants to override it with new legislation if the EU does not agree to changes – a move Brussels has warned is “illegal and unrealistic”.

However, tensions have cooled in recent months, with both sides pledging to work together to find a way forward.

Last month, the EU and the UK said there was a “new basis” for resolving the Northern Ireland Protocol row after an agreement was reached in sharing trade data.