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The Government is planning to pull the plug on cross-party Brexit talks next Wednesday if there is no breakthrough next week, sources claim.

Senior figures from the Tories and Labour will resume negotiations on Tuesday, after the Bank Holiday weekend, after early signs of compromise this week.

Tory Brexiteers now fear Theresa May will climb down and accept some form of Labour's customs union plan - after the Cabinet was warned options are limited.

One minister, Jeremy Wright, told yesterday's Cabinet meeting the choices were like "being in an acid bath" while Michael Gove said an "unpalatable” deal was better than a "disastrous" one.

And Chief Whip Julian Smith reportedly warned: "It's a customs union or a second referendum, and we are not having a second referendum."

Yet despite the warnings, both sides remained downbeat about the chances of striking a deal in time to scrap planned European elections on May 23.

(Image: REUTERS)

Labour's Shadow Business Secretary said today she "hopes" there will be compromise - but the Tories still had to move.

Rebecca Long-Bailey told the BBC: "The talks so far have been positive, both sides have gone in with the intention to try and reach a compromise.

"We're waiting to see if the government moves on some of its positions."

She did, however, say the Government may have no option but to move towards Labour on a customs union.

"I think, pragmatically, that they potentially may have no option in order to be able to push this deal through," she said.

"We are fleshing out the details to see how far the Government can move towards us and then we will be able to ascertain how far we are able to move towards them.

"There are certain issues that we think they will be prepared to move on and we might be prepared to support certain positions.

"There are certain areas which we haven't seen any movement at all. We want to take a view on the whole package, the whole deal, to see if there has been any tru

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e movement."

Quizzed by journalists today, No10 refused to rule out the PM caving in and accepting a customs union as the price of a deal with Labour.

A senior Downing Street source said: “We believe that leaving the EU with a negotiated deal is the right thing to do and in order to do that we will clearly need compromise on both sides in the talks.”

Talks were being carried out “seriously and in good spirits”, they added.

“Both sides will need to show movement.”

Fuelling hopes a breakthrough, Jeremy Corbyn’s spokesman said: “We believe a sensible compromise is available and can win the support of Parliament.”

Talks between officials took place yesterday, and negotiations will continue next week between ministers and their Labour counterparts.

“There is significant movement being discussed,” the Labour leader’s spokesman added.

“We have seen clear evidence that the Government is prepared to explore shifts in its position, and that’s what we need to nail down - how far and where those shifts are going to go.”

Asked Labour was still wedded to a UK-EU trading arrangement defined as “a customs union”, he said: “The name isn’t the most important thing.”

By next week, five weeks will have passed since Brexit was due to take place.

And both main parties will have seen the results of tomorrow’s local elections in England, which are set to be overshadowed by the ongoing EU withdrawal crisis.

If the talks break down, ministers are planning to give MPs another series of votes on Brexit options, though this time using a preferential system so that they are forced to agree on at least option.

(Image: ANDY RAIN/EPA-EFE/REX)

Government insiders hope this would pit Mrs May’s own proposal into a run-off with the next favourite option - probably a softer Brexit - and focus the minds of Tory Brexiteer rebels to finally back her deal.

Tory ministers are split over whether to move to Labour's position on Brexit - which includes a customs union with the EU, the most controversial area for compromise.

Brexiteers led a failed bid to rush the Withdrawal Agreement Bill back to Parliament, pushing MPs into another Brexit vote within days.

And Foreign Secretary Jeremy Hunt warned the Government risks losing Tory support if it agrees a customs union.

“If we were proposing, which I very much hope we don’t, to sign up to the customs union, then I think there is a risk that you would lose more Conservative MPs than you would gain Labour MPs,” he said.

But Culture Secretary Jeremy Wright told the Cabinet "the options are like being in an acid bath... because there are no good options," the Times reports.

(Image: Leon Neal)

Chief Whip Julian Smith told members of Cabinet it was “time to get real” over the options, after Theresa May's Brexit deal was defeated three times, the Telegraph reports.

And Environment Secretary Michael Gove argued for promising the "benefits of a customs union", it is reported.

Brexit was delayed last month until October 31, with EU chief Donald Tusk warning: "Please do not waste this time."

But the House of Commons finished for the day just after 4pm yesterday as MPs failed to find progress on Brexit.

It comes as Mrs May faces a high-powered group of MPs today who are expected to quiz her on her plans to break the Brexit deadlock.

The Prime Minister will face the Liaison Committee of Parliament from 3pm after PMQs .