Theresa May is to travel to Brussels on Wednesday for crunch talks with the European Commission, as Jean-Claude Juncker said a breakthrough is in “God’s hands’.

It came after the prime minister met with her cabinet amid reports ministers told Ms May to stop using a no-deal scenario as a threat in the ongoing Brexit negotiations.

And it followed the decision by seven MPs to quit Labour on Monday – the biggest schism in the party since the formation of the Social Democratic Party (SDP) in the 1980s.

On Tuesday members of the European Research Group (ERG) also met with the PM to discuss the future of the so-called Malthouse compromise arrangement amid speculation it had been killed off.

The plan, named for MP Kit Malthouse, would see the backstop dropped and the transition period extended in exchange for the UK paying some of the financial settlement it owes Brussels.

Jacob Rees-Mogg and Steve Baker, of the ERG, said in a joint statement that the compromise was “alive and kicking”. They added: “We look forward to further developments.”

Brexit secretary Stephen Barclay had previously briefed the cabinet on his talks with Michel Barnier in Brussels on Monday, at which the EU chief negotiator voiced concerns about the viability of the Malthouse plan.

Mr Barclay is also expected to make another visit to Brussels later in the week as Britain seeks the bloc’s approval for changes to the backstop – the insurance arrangement designed to avoid a hard Irish border after Brexit by keeping the UK in a customs union until a wider trade deal is agreed.

Late on Tuesday, Mr Barnier tweeted that there was a “clear and strong unity of EU27 to preserve the withdrawal agreement in all its dimensions, including on Ireland”.