Boris Johnson will fly to Brussels later in an attempt to reach a breakthrough on a post-Brexit trade deal over dinner with European Commission President Ursula von der Leyen.
The Prime Minister and the EU chief will try to salvage negotiations on Wednesday evening after the UK Government dropped controversial plans that would have allowed ministers to break international law.
The olive branch came after the two sides reached an agreement on the implementation of the Brexit divorce deal as time rapidly runs out to the end of the transition period on December 31.
But 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, the PA news agency understands.
Both sides have set the stage for a potentially make-or-break meal in the EU Commission’s Berlaymont headquarters.
Johnson will depart for the Belgian capital after taking part in Prime Minister’s Questions.
No 10 hopes the dinner could pave the way for talks between Barnier and his Downing Street counterpart Lord Frost to resume, but there were warnings that their political masters must find the will to break the deadlock.
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.”
Leaders of the EU’s 27 member states are due to gather in Brussels on Thursday for a two-day summit, potentially giving further political impetus for a deal.
On Wednesday, Cabinet Office minister Michael Gove and his counterpart on the UK-EU joint committee, Maros Sefcovic, reached an agreement on border checks and trading rules for Northern Ireland.
Their discussions are separate from the trade talks, but the agreement could improve relations between the two negotiating teams.
Ministers enraged the EU by requesting the powers to breach international law in overriding parts of the Withdrawal Agreement divorce deal in the UK Internal Market Bill, arguing it was needed to protect the trading relationship between Great Britain and Northern Ireland in the event of no-deal.
But Gove and Sefcovic said in a statement that “an agreement in principle” had been reached on all issues and that the Government would withdraw the controversial clauses of the Bill.
The agreement covers issues including border checks on animal and plant products, the supply of medicines and deliveries of chilled meats and other food products to supermarkets.
There was also “clarification” on the application of rules on state subsidies.
The Prime Minister said trade talks with the bloc were proving “very tricky” but said he hoped the “power of sweet reason” would triumph.
Lord Frost was to return to London on Tuesday to discuss the remaining differences in reaching a free trade deal with Johnson, Downing Street said.
Talks have faltered on the issues of fishing rights, the “level playing field” measures aimed at preventing the UK undercutting the EU on standards and state subsidies, and the way that any deal would be governed.
The Office for Budget Responsibility has suggested that a no-deal outcome could wipe 2% off gross domestic product, a measure of the size of the economy, in 2021.
Bank of England governor Andrew Bailey has warned that the long-term damage caused by a no-deal situation would be worse than the economic hit from coronavirus.