Angela Merkel has said there is still every chance of a Brexit deal being struck as British negotiators headed to Brussels for further talks.
"We still have every chance of getting an orderly (Brexit) and the German government will do everything it can to make that possible - right up to the last day. But I also say we are prepared for a disorderly Brexit," Mrs Merkel told the Bundestag.
But Pedro Sanchez, the acting prime minister of Spain, said that the EU would offer no further concessions to the UK, which was headed for a no deal Brexit.
David Frost, the top UK Brexit official, is travelling to Brussels on Wednesday for talks about the political declaration with EU officials. The declaration sets out the terms of the negotiations on the future trading relationship between the UK and the EU.
Mrs Merkel hinted that Brussels would insist on level playing field guarantees as part of any agreement. The commitments to uphold EU standards on tax, state aid and the environment - designed to keep the UK from gaining a competitive advantage over the EU - were accepted by Theresa May.
Mr Frost has told officials he wants them ditched and for Britain to remain free to diverge from Brussels’ rules and regulations, even if that means accepting tariffs on some goods as part of a Canada-style trade deal.
"The fact remains that after the withdrawal of Britain, we have an economic competitor at our door, even if we want to keep close economic, foreign and security cooperation and friendly relations," the German Chancellor said in Berlin.
The British to ditch the level playing field guarantees has angered some in the EU-27 and jeopardised agreement on the prime minister’s call for an all-Ireland food standards zone.
The zone would go some way, but by no means all the way, to replacing the Irish border backstop, which would put the UK into a customs union with the EU to prevent checks on the border.
EU27 diplomats said that asking for different treatment in Northern Ireland from the rest of the UK on the standards issue was a classic example of trying to “have your cake and eat it”.
Pedro Sanchez repeated the EU’s long-standing red line that the Brexit withdrawal agreement cannot be renegotiated. He added that “no further concessions” could be made to Britain in a speech to MPs in Madrid.
Hopes have risen that a breakthrough could be possible. The EU would be prepared to limit the backstop to Northern Ireland only, rather than the whole UK. That was their original offer but Mrs May extended the backstop to the rest of Britain to prevent a customs border in the Irish Sea.
The British government has denied that it is prepared to accept the Northern Ireland backstop and is pushing for technical solutions, in conjunction with the food standards zone, to replace it.
On Tuesday, Phil Hogan, the Irish EU commissioner, said the “penny was dropping” with the British government.
“Mr Johnson has made a proposal in the last few days talking about an all-Ireland food zone, he told the Irish Times, “If we can build on that we certainly might get closer to one another in terms of a possible outcome.”
“I remain hopeful that the penny is finally dropping with the UK that there are pragmatic and practical solutions that can actually be introduced into the debate at this stage, albeit at the eleventh hour, that may find some common ground between the EU and the UK.”
Mr Hogan was named as the EU’s new trade commissioner on Tuesday and will helm the future negotiations on a free trade agreement. He will take office on November 1.
If no agreement is struck before the Oct 31 deadline, or an extension is not requested, Britain will leave the EU with no deal.