European leaders – including France’s Emmanuel Macron and Germany’s Angela Merkel – have been told the EU is unlikely to get a trade deal with the EU by Sunday’s deadline.
European Commission President Ursula von der Leyen told the bloc’s 27 leaders talks were “difficult”.
Time is running out to reach an agreement before the UK stops following EU trade rules on 31 December.
UK PM Boris Johnson says there is a “strong possibility” of no deal.
Weeks of intensive talks between officials have failed to overcome obstacles in key areas, including competition rules and fishing rights.
Mrs von der Leyen, who met Mr Johnson on Wednesday for three hours of talks, has been briefing European leaders, who are meeting in the Belgian capital for a two day-summit.
According to EU officials, she struck a downbeat note about the chances of success, saying the “main obstacles” standing in the way of a deal – disagreements over fair competition rules, how a deal would be enforced and fishing quotas – remained in place.
An EU official said the probability of a no deal was higher than of a deal.
She is due to give a press conference shortly.
Mr Johnson, who has been pressing for a deal similar to the one the EU finalised a deal with Canada in 2017, has said he couldn’t accept the UK remaining “locked” into the EU’s legal system, or being punished if it diverged from EU standards.
Culture Secretary Oliver Dowden suggested the EU’s unwillingness to compromise was “frustrating” as the two sides were “90% of the way there”.
If the two sides fail to agree a deal, it could result in taxes being imposed on each other’s imports from 1 January, leading to higher prices for the goods the UK buys and sells from and to the EU, among other changes.
Asked during a BBC interview about the implications of defaulting to World Trade Organisation rules for trade, he said any change in the UK’s trading relationship with the EU was bound to be “challenging”.
And he suggested it would not be in either side’s interest to tax products, such as beef, lamb or car parts.
“If that happens, we will ensure we provide appropriate support and we are already in discussion with farmers in the lamb industry and in extensive discussion with the automobile sector,” he told BBC Radio 4’s Today.
Mr Johnson has likened leaving the EU’s single market and customs union without a new arrangement to Australia’s existing relationship with the EU and suggested the UK would “thrive” despite some initial disruption.
But a former Australian prime minister has warned the UK “careful what you wish for”.
“Australians would not regard our trade relationship with Europe as being a satisfactory one,” Malcolm Turnbull told the BBC’s Question Time on Thursday.
“There are really some very large barriers to Australian trade with Europe which we are seeking to address.”
Australia, which is seeking a new deal with the EU, does have some arrangements in place with the EU which the UK wouldn’t have unless it negotiated a series of “side deals”, which the EU has ruled out.
The EU has set out the contingency measures it would take in the event of no trade agreement being reached with the UK.
The plans aim to ensure that UK and EU air and road connections still run after the post-Brexit transition period ends on 31 December.
They also allow the possibility of fishing access to each other’s waters for up to a year, or until an agreement is reached.
Ireland’s Europe minister Thomas Byrne said the failure to reach a deal would have serious economic consequences for the UK as well as his own country but the EU must hold firm in protecting the single market.
He told Radio 4’s Today that a fair trading arrangement “ought to be the most natural thing in the world” and urged both sides to compromise.