Video report by ITV News Political Correspondent Paul Brand
A senior government source has said there is "every chance" a Brexit trade deal between the UK and EU will not be reached.
It comes after "no tangible progress" was made in talks over the weekend, the source said.
Following a phone call with European Commission President Ursula von der Leyen on Monday afternoon, it was also announced that Boris Johnson will travel to Brussels later this week in a last ditch attempt to get a deal.
What are the 'critical issues' left to be resolved in talks? ITV News Political Editor Robert Peston explains:
The pair said they had "taken stock" of ongoing negotiations but "significant differences" remain.
The senior government source said: "Talks are in the same position now as they were on Friday. We have made no tangible progress. It’s clear this must now continue politically.
"While we do not consider this process to be closed, things are looking very tricky and there’s every chance we are not going to get there."
Ireland's Foreign Minister also said the situation was pivoting towards the UK leaving without a deal."In Brussels the mood is starting to shift to contingency planning for a no deal as opposed to the compromises that are necessary to get a deal done," Simon Coveney said.
ITV News Europe Editor James Mate has reaction from the other European leaders:
"Securing a deal is critical to the British national interest for jobs and security. Even at this 11th hour, we urge both sides to get on with reaching an agreement.
"We can then focus on the job at hand which is securing the economy and rebuilding our country from the pandemic."
Mr Johnson and Ms von der Leyen spoke on the phone for an hour and a half to assess whether a post-Brexit trade deal can be salvaged after trade talks between EU and UK chief negotiators over the weekend ended without an agreement.
A statement from the pair said: "We agreed that the conditions for finalising an agreement are not there due to the remaining significant differences on three critical issues: level playing field, governance and fisheries.
"We asked our chief negotiators and their teams to prepare an overview of the remaining differences to be discussed in a physical meeting in Brussels in the coming days."
Their second call in a little over 48 hours came after Michel Barnier and his UK counterpart Lord Frost spent the day talking in Brussels.
The main sticking points remain fishing rights, governance of the deal and the so-called level playing field - the latter being the "most difficult", according to Paymaster General Penny Mordaunt, who updated MPs on the state of talks.
Earlier, the government said it would be prepared to retract controversial aspects relating to the Irish border from Brexit legislation, should progress be made toward a trade deal this week.
The bloc had said a free-trade agreement could not be reached if the Bill was implemented unchanged.
ITV News Political Editor Robert Peston said the move is "an elegant attempt" by the prime minister to "render harmless" the controversial clauses, but others branded it "as limited" an offer "as you can get".
David Henig, of trade think tank the European Centre For International Political Economy, said: “As trust-building measures go the offer not to break (a) treaty if you get what you want is about as limited as you can get.
“An olive leaf at best, definitely not the branch. And not a sign of a government confident to make concessions.”
On Monday night MPs voted to reinsert powers that would enable ministers to breach international law.
The House of Commons restored sections of the infamous UK Internal Market Bill which had been removed by peers.
The House of Lords had inflicted a series of heavy defeats on the government to remove the clauses.
The Bill sets out the way trade within the UK will work once it is outside the EU’s single market and customs union.
Labour's Rachel Reeves says the PM's trip to Brussels has come too late:
As talks appeared to have hit a stalemate, Labour hit out at the government for "failing to deliver their promises to the British people and failing to get the deal they promised done".
The party's Shadow Minister for the Cabinet Office, Rachel Reeves MP said: "Day after day we see this government failing to deliver their promises to the British people and failing to get the deal they promised done.
Brexit trade talks - the sticking points at a glance:
- Fishing rights: The UK wants total control over its own fishing waters after the Brexit transition period ends, with a 12 mile exclusion zone around the British Isles banning all foreign vessels. The EU wants the UK to stick to the Common Fisheries Policy, an EU agreement which gives member nations the rights to fish in European waters - more here.- Level Playing Field: This is a concept all EU nations agree to, which ensures member nations cannot undercut others by setting their own rules on issues such as the environment, taxation and state aid. The EU says a zero-tariff trade deal is dependent on the UK agreeing to a level playing field. The UK disagrees, saying a fundamental aspect of Brexit is that the UK will be able to set its own rules.- Governance of a deal: It's likely that any trade deal will eventually result in disputes. The EU wants the European Court of Justice to be the final authority in ruling over disputes. The UK says the ECJ should have no role and final decisions should be made by a bespoke arbiter.
Downing Street said earlier on Monday that it was prepared to continue talks for “as long as we have time available”, but admitted time was in “very short supply”.
The comments appeared to be at odds with the EU’s chief negotiator Mr Barnier, who reportedly told MEPs the deadline for talks succeeding is Wednesday.
Leaders of the EU’s 27 member states are due to gather in Brussels on Thursday for a two-day summit, potentially giving political impetus for a deal.
The UK leaves the single market and customs union at the end of December and businesses already face major changes to their trading relationship with the EU from January 1.
Failure to reach a deal would add additional barriers and tariffs, and the Office for Budget Responsibility has warned the disruption could wipe 2% off gross domestic product – the standard measure of the size of the economy – in 2021.
Meanwhile, Cabinet Office minister Michael Gove met his counterpart on the UK-EU joint committee in Brussels on Monday, although the discussions are separate from the trade negotiations.
Any deal would have to be ratified by both Houses of Parliament in the UK and the European Parliament as well as signed off by EU leaders.
France has publicly warned it will veto any deal if it is unhappy with the terms, amid signs President Emmanuel Macron is anxious that Mr Barnier is preparing to give too much ground in his determination to get a deal.
Earlier the PM's official spokesperson admitted food prices would go up if the UK leaves the European Union without a trade deal.
He said EU-imposed tariffs could see a small rise in the price of some food products, if a trade deal is not reached, but exchange rates and factors such as fuel could drive costs up and "have an impact on food availability".
On Monday evening MPs will vote on whether to overturn amendments by the House of Lords which removed controversial aspects of the UKIM Bill relating to the Irish border.
It is likely, following the prime minister's promise to remove the law-breaking aspects of the Bill, that MPs will reject the Lords' amendments and send the Bill back unchanged.
On Wednesday, MPs will then go on to consider the Taxation (Post-Transition Period) Bill which contains further similar provisions, which have infuriated the EU.