In the early hours of Wednesday morning, Theresa May made a momentous choice. After a day of acrimonious debate in her cabinet and inner circle, the prime minister decided that she was willing to take Britain out of the EU without a deal.

At Thursday’s European Council meeting in Brussels, EU diplomats wondered whether Mrs May was bluffing, but those close to the prime minister said if she cannot secure her Brexit deal she is determined the UK should embark on a no-deal exit.

Since announcing on Wednesday that she would ask EU leaders for a short extension to the bloc’s Article 50 process — to delay Brexit from March 29 to June 30 — people who have spoken to the prime minister said she is reconciled to the implications of what happens if the UK parliament continues to reject her withdrawal agreement.

“The mood has hardened on no deal,” said one person close to the prime minister. One Eurosceptic Conservative MP who met Mrs May on Wednesday night said: “She didn’t seem concerned about leaving with no deal.”

The prime minister refused to rule out a no-deal Brexit as she arrived in Brussels, and in her preferred scenario this could happen on June 30.

It is a massive disaster, staggering incompetence. We are heading for no deal, which would be the first time a developed economy has essentially placed sanctions on itself

But French president Emmanuel Macron said that if the British parliament fails to approve Mrs May’s Brexit deal in a vote earmarked for next week, the UK would be heading for a no-deal exit on March 29. EU leaders were on Thursday discussing an Article 50 extension, and whether it should be conditional on MPs approving Mrs May’s withdrawal agreement.

There is, of course, a big question over whether Mrs May would ever be allowed to let the UK crash out of the EU in the face of massive political and business opposition.

If she loses what would be the third so-called meaningful vote by MPs on her deal next week, she would be under intense pressure to resign.

Senior Europhile Conservative MPs speculated they could ultimately join with Labour to bring down the government in a vote of no confidence and force a general election, rather than allow Mrs May to — in their view — crash the economy.

The House of Commons voted this month by 413 to 202 against the UK leaving the EU without an agreement. If Mrs May refused to heed this non-binding vote, MPs could try to seize control of the parliamentary agenda to change the law to stop a no-deal exit.

“It is a massive disaster, staggering incompetence,” said one influential Conservative MP. “She is trying to keep the party together in an extraordinarily stupid way. We are heading for no deal, which would be the first time a developed economy has essentially placed sanctions on itself.”

Under the prime minister’s scenario planning, MPs have until April 11 to agree an exit deal: that is the legal cut-off date when Britain would have to legislate to take part in May’s European Parliament elections. Mrs May is adamant Britain should not take part in those elections.

If the Commons had not signed off her withdrawal agreement by April 11, the prime minister would step up preparations for a no-deal exit, working with the EU to try to mitigate the inevitable economic shock. Chancellor Philip Hammond has put aside £26bn in an “insurance fund” to cushion the immediate impact of the UK crashing out of the EU.

In deciding she is willing to take the UK out of the EU without a deal, Mrs May has sided with Eurosceptic members of her cabinet and the pro-Brexit European Research Group of Tory MPs, who are sanguine or even enthusiastic about a “clean break” with the bloc.

“She seemed pretty down and low,” said one Conservative MP who met the prime minister on Wednesday night, shortly before she used a televised address to accuse parliament of letting down the country by not approving her deal.

The prime minister’s stance on a no-deal exit has filtered out of her inner circle and caused alarm at senior levels of the government. “The prime minister has caved into pressure from the ERG, at huge risk to the integrity and economic prosperity of the UK,” said one minister.

The fact Mrs May’s decision was taken in the early hours of Wednesday without formal cabinet approval has fuelled concerns in the Treasury about Mrs May’s judgment. Foreign secretary Jeremy Hunt on Thursday spoke of the “extraordinary pressure” on the prime minister.

Mrs May’s allies said she will work with the EU to ensure the UK does not crash out of the bloc on March 29 but that she is serious when she insists she will not consider delaying Brexit beyond June 30.

“We are nearly three years on from the original vote,” said the prime minister on Thursday. “It is now the time for parliament to decide. A short extension [to Article 50] gives us that opportunity to decide to leave the European Union, to deliver on the result of that referendum and I sincerely hope that will be with a negotiated deal.”

In Brussels, EU officials agreed with Mrs May that the “point of no return” will be in mid-April, but there are diverging views in European capitals about what she would do if she has not secured her Brexit deal by that point.

One senior EU negotiator predicted Mrs May, at this juncture, would indeed put “party over country” and take Britain out of the bloc without an agreement. “No deal keeps her in power,” said the official.

Other EU negotiators think the opposite, with one saying Mrs May had “too much integrity” to accept a no-deal exit. “You have to destroy the country to do this,” said the official, predicting Mrs May would delay Brexit for more than a year before resigning. “She will not lead the country into the abyss.”

Additional reporting by Sebastian Payne in London and Michael Peel in Brussels

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