Video report by ITV News Political Correspondent Daniel Hewitt
A post-Brexit trade deal "may not be possible", a UK government source has said.
It came just hours after it was announced that Prime Minister Boris Johnson will travel to Brussels on Wednesday to meet with the European Commission president in a bid to try and salvage an agreement as negotiations appear to be making little headway.
Mr Johnson's official spokesperson said the PM will meet with Ursula von der Leyen for dinner to continue talks.
Negotiations between the UK and EU appear to have made little ground in recent days and on Tuesday, Brussels’ chief negotiator Michel Barnier warned EU foreign ministers that he now believes a no-deal departure is more likely than a trade agreement being brokered in time, ITV News understands.
Also on Tuesday, a UK government source said: "It’s clear that some political impetus will be required for the talks to make any more progress.
"If we can make progress at a political level it may allow Lord Frost and his team to resume negotiations over the coming days.
"But we must be realistic that an agreement may not be possible as we will not compromise on reclaiming UK sovereignty."
After news of the PM's meeting with Ms von der Leyen, the European Commission president tweeted: "I look forward to welcoming UK Prime Minister @BorisJohnson tomorrow evening.
"We will continue our discussion on the Partnership Agreement."
The move comes after the UK agreed "in principle" to remove controversial aspects of the UK Internal Market Bill.
The olive branch came after the two sides reached an agreement on the implementation of the Withdrawal Agreement divorce deal as time rapidly runs out to the end of the transition period on December 31.
This could mean the PM may have an easier job securing a trade deal with Ms von der Leyen.
The Brussels trip is being viewed as a make-or-break moment for the process after months of talks led by Lord Frost and the EU's Michel Barnier failed to reach an overall agreement.
Asked whether the trip could lead to a breakthrough, Mr Johnson said he has to be "optimistic" but "it's looking very, very difficult at the moment".
"We will do our level best, but I would just say to everybody be in good cheer, there are great options ahead for our country on any view.," Mr Johnson added.
He added: "I think the UK government's position is that we are willing to engage at any level, political or otherwise, we are willing to try anything."
Number 10 has not ruled out MPs being made to sit over the Christmas period to pass any Brexit deal.
Asked if there were contingency plans for the Commons to sit between Christmas and New Year’s Eve, the Prime Minister’s spokesperson said: “We believe that should we reach a free trade agreement there is parliamentary time to put it through the House.
“I think we have seen previously Parliament’s ability to pass things at a good speed where necessary and we continue to believe that there is time to do so.”
The spokesperson said “time is obviously in short supply” but that the government wanted to reach a deal “as soon as possible”.
But talks on a UK-EU trade deal will not continue into next year, Downing Street said.
The withdrawal period ends on December 31, meaning if no deal is reached and ratified before then, then the UK will trade with the bloc on Word Trade Organization terms.
The prime minister’s official spokesperson said: “We have been clear that the future relationship needs to be concluded by the end of the year and negotiations won’t continue into next year.
“That’s been our position throughout.”