The European Union launched legal proceedings Thursday in response to the British government's attempt to overturn parts of the Brexit withdrawal agreement. The infringement procedure, which could come before European courts, has not yet derailed post-Brexit trade talks but reflects the pessimistic mood in Brussels as time runs short for a deal.

"This morning, the Commission has decided to send a letter of formal notice to the U.K. government. This is the first step in an infringement procedure," European Commission President Ursula von der Leyen said.

London now has one month now to reply to the formal letter of complaint from the Commission, which will then assess whether the answer is satisfactory and can then request that the U.K. fall back in line. If that fails, it can sue at the Luxembourg-based European Court of Justice (ECJ).

The move comes as British and EU negotiators struggle to close the gap on state aid in parallel trade negotiations that have been overshadowed by the new controversy over the Internal Market Bill. The British government unveiled the controversial bill last month which is winding its way through Parliament and would override parts of the Brexit treaty that Johnson struck with the EU last year. If it becomes law, Johnson's Internal Market Bill will give the U.K. the power to disregard part of the Brexit withdrawal treaty dealing with trade to and from Northern Ireland, which shares a 300-mile (500-kilometer) border with EU member Ireland.

Johnson has said he would not put it past the EU to abuse the treaty to put the Northern Irish part of the U. K. in an economic chokehold. The EU denies this and insists the full withdrawal agreement must be respected for fear that it otherwise might reignite tensions on the island of Ireland.

In parallel to the battle over the bill, EU and U.K. negotiators Michel Barnier and David Frost are meeting in Brussels this week for their final planned round of talks on a post-Brexit trade deal. Diplomats say these talks will not be torpedoed by the legal action but London's stance has cast a cloud over negotiations ahead of a planned EU summit on Oct. 15.

If there is no deal by the end of October, European officials warn it is hard to see how one could be ratified by the end of the year, meaning the U.K. would leave the single market with no trade agreement. This would exacerbate what is already expected to be the economic shock of Brexit, with a more severe disruption to cross-channel trade, renewed tariffs and the prospect of a dispute over fishing rights.