Brexit: David Davis admits it's possible UK will not reach deal with European Union

David Davis has admitted it is possible the UK will not reach a deal with the European Union over Brexit.

The Brexit Secretary said reaching a deal with the EU was the most probable outcome of the talks, but went on to say the British Government was prepared for no deal with the bloc.

“Reaching a deal with the European Union is not only far and away the most likely outcome, it’s also the best outcome for our country,” Mr Davis said in a speech in London.

“I don’t think it would be in the interest for either side for there to be no deal. But as a responsible government it is right that we make every plan for every eventuality.”

Both sides have spoken of their frustration at a lack of progress in negotiations so far, although Mr Davis said the talks had made real and tangible progress.

Britain wants to move discussions on to the future trading relationship with the EU, which Brussels will not consider until London settles its financial commitments to the bloc.

While Mr Davis said he was “unambiguously” seeking a deal, he said Britain was ready for talks to fail.

“Over the past year every department across Whitehall has been working at pace covering the whole range of scenarios,” he said.

“These plans have been well developed, have been designed to provide the flexibility to respond to a negotiated agreement, as well as preparing us for the chance that we leave without a deal.”

It comes amid reports Britain is planning to offer more money to settle its bill with the EU in the latest bid to unblock the stalled Brexit negotiations, but only if the EU agrees to begin discussing a future free-trade deal.

Britain has previously offered about €20bn (£18bn), but the EU wants at least €60bn.

It is understood Theresa May has cleared the way for Britain to pay £40bn to break the deadlock.

Downing Street declined to confirm the amount, but said “the UK and the EU should step forward together” to unblock the negotiations.

“It remains our position that nothing’s agreed until everything’s agreed in negotiations with the EU,” Downing Street added.