Michel Barnier yesterday warned the European Union was prepared for Brexit negotiations to end in no deal and said he would not ask EU leaders to begin trade talks with Britain at a Brussels summit next week.

The EU’s chief Brexit negotiator said that talks were deadlocked after five rounds of pressured negotiations with huge divisions between the two camps remaining, especially over the so-called Brexit bill.

Mr Barnier described the impasse as “disturbing” and insisted that there was “no question” the EU would make concessions on the three issues of the financial settlement, Ireland and citizens’ rights.

With time running out to strike a deal before the two-year Brexit negotiation period expires, the prospect of no deal is looming. British Prime Minister Theresa May revealed this week that the UK was already making contingency plans in case an agreement is not finalised before 29 March 2019.

“No deal would be a very bad deal. To be clear on our side we will be ready to face any eventualities and all the eventualities,” Mr Barnier said at a press conference at the European Commission’s headquarters.

United Kingdom's Secretary of State for Exiting the European Union, David Davis (L) and European Chief Negotiator for Brexit, Michel Barnier

United Kingdom's Secretary of State for Exiting the European Union, David Davis (L) and European Chief Negotiator for Brexit, Michel Barnier

Mr Barnier was given a mandate by the 27 heads of state and government to helm the Brexit talks on their behalf. The mandate restricts him from discussing trade or a transition deal until the EU judges that “sufficient progress” has been made on the issues of the so-called Brexit bill, citizens’ rights and Ireland.

David Davis, the Brexit secretary, called on EU leaders, who meet in Brussels on 19-20 October, to grant Michel Barnier the flexibility to begin talks on Britain’s future relationship with the EU.

“I make no secret of the fact that to provide certainty, we must talks about the future,” Mr Davis told reporters. “I hope the leaders of the 27 will provide Michel with the means to explore ways forward with us on that.”

There is no guarantee that EU leaders will heed Mr Davis' call, which was echoed by Mr Barnier.

The French official said he would not recommend EU leaders agree Britain has made sufficient progress but he praised Theresa May’s offer to pay 20 billion euro (£17bn) to the EU budget in her Florence speech.

Mr Barnier said he hoped to make "decisive progress" before December's European Council, which has now been targeted for the sufficient progress test.

He hinted strongly that he would ask reluctant EU governments, including Germany, to expand his mandate. While that is unlikely to include full free trade negotiations, it could allow “scoping” of the future relationship and the transition deal, that would push back Brexit until 2021.

“We are in deadlock at the moment,” Mr Barnier said, “But with the necessary will and commitments entered into by Theresa May from Florence we can exit this deadlock."

“Slowly but surely, I will explore ways of getting out of this deadlock we find ourselves in.”

A pro-EU protester, Madeleina Kay, 22, from Sheffield, sits in the front row of the press conference before being escorted out

A pro-EU protester, Madeleina Kay, 22, from Sheffield, sits in the front row of the press conference before being escorted out

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The Telegraph understands that last week Mr Barnier, as well as suggesting a looser mandate to enable him to discuss the terms of a transition deal, also suggested a deal to member states over citizens' rights - but the idea was rejected by France, Germany and others.

Mrs May said: “There has actually been good progress made in these talks and Michel Barnier himself has recognised that over the coming weeks we will be able to make constructive progress as well.

"I know that there has been a lot of work put into this and many issues on which we are very close to agreement such as on citizen rights, for example, which is important because we want EU citizens to stay here in the UK, but we also want to ensure that we get into the business of talking about the future relationship and the future partnership we are going to have with the EU.”

EU sources insist the bloc will not conclude a deal on citizens' rights until the UK specifies which budget commitments it will honour, particularly on EU pensions and future loan liabilities.

"A deal could be done tomorrow on citizens' rights but EU member states are just choosing not to fully engage," the source added.

Sources close to the negotiations said the EU had also refused to engage on voting rights after Brexit, and that only "incremental" steps had been taken on the issue of whether family members should be able to join EU citizens in the UK.

Asked why the EU was refusing to engage with the constructive British approach, Mr Barnier cited his restrictive mandate from the EU members states. "[We are] willing to discuss it at the appropriate time, but that time has not yet come," he said.

UK sources also reject the EU's counter assertion that, by refusing to specify which financial commitments the UK will honour, Britain is itself not engaging on the financial settlement.

British negotiators point the fact that Mrs May promised €20bn in Florence to ensure that no EU member state would pay more, or receive less, in the current budget cycle that ends in 2020.

"The PM made a very generous offer in Florence, which addressed a legitimate EU concern, but any final settlement cannot be agreed without reference to the future trading relationship."

A British anti-Brexit campaigner dressed as “EU Supergirl” appeared at the press conference and caused bewilderment among British officials and undisguised glee among European journalists.

Madeleina Kay, 22, from Sheffield, was escorted out of the press room before Mr Davis and Mr Barnier took to the podium.

3:03PM

Debate with Asa Bennett

The Q&A has now ended, but Asa Bennett will be returning to the comments section to answer your questions.

2:57PM

Dia Chakravarty: The EU enjoys hard talk, but good will is there

"There is a lot of hard talk from them, they clearly think it was a terrible idea for us to leave, "says Dia.

However, she draws a distinction between hard rhetoric and political ill will. As an optimist, she says this hard talk is merely political rhetoric, which is easier to work around than ill will.

2:53PM

Asa Bennett: Our readers are 'excited' by no deal

Having carefully read through Telegraph reader comments, Asa says that far from being terrified by the prospect of "no deal," they seem rather excited by the opportunities it could bring.

A "no deal" scenario would be as good as Britain can make it, says Dia. The question, however, is whether we have done enough preparation for one.

2:50PM

Dia Chakravarty: We can't talk money without talking future relationship

Dia Chakravarty says the difficulty on the financial settlement is that we cannot be expected to name a sum if we do not know what the final relationship is going to be.

Asa agrees, saying that Jean Claude-Juncker wants to "defeat Britain" with an arsenal of bureaucracy and pageantry.

It's proving to be a lively debate - and you can take part in the comments section below.

2:45PM

Asa Bennett: This press conference was risible

The live Q&A with Dia Chakravarty and Asa Benett has kicked off, with the latter branding this press conference "risible" due to the lack of flexibility shown by the EU 27 to agree to trade, as they continue to "squeeze Britain" for as much money as possible.

12:10PM

Barnier hints at loosening mandate

"Slowly but surely I will explore ways of getting out of this deadlock we find ourselves in," says Mr Barnier in his closing remarks at the press conference, hinting that they may be prepared to loosen his mandate from the EU27 and push the talks onto the future relationship.

12:01PM

'Are you just bad negotiators?'

The BBC asks both negotiators whether the state of play shows they are simply bad at negotiations, which gets a hearty laugh.

Mr Barnier retorts that "we need to play things down a bit and settle the accounts, and draw conclusions from the important decision in a sovereign manner by the UK to withdraw from the union...and break the deadlock." He says once this is done progress will be made on other matters.

As for Mr Davis, he says it's no surprise there are points of negotiation on both sides. He says both he and Mr Barnier have a close eye on the "landing ground" and repeats his hope that the European Council will give the green light to talk trade next week.

11:57AM

UK accused of exaggerating progress made

Mr Davis is accused of "talking up" progress when "in fact little has been made" by a British broadcast journalist, who also asks Mr Barnier why is refusing to loosen his mandate.

Mr Davis gives a gruff response: "I don't recognise what you describe." He then says it's important that the EU agree to open talks on trade at the European Council.

Mr Barnier then weighs in, saying there is a "real will" on the EU side to build a lasting partnership between both sides.

But he stresses this can only take place after an "orderly withdrawal" as per the first phase of the negotiations.

11:50AM

Barnier: No deal will be a very bad deal

"The risk of no deal, it will be a very bad deal," replies Mr Barnier to the same question. "We will face any and all eventualities."

On another question about the EU possible changing its mandate on the structure of the talks, he said: "My duty is to follow the mandate and as a negotiator I have to find a way forward.

"Let me be frank. All these subjects are linked for the member states. We are in deadlock at the moment. But with the necessary will and commitments entered into by Theresa May from Florence we can exit this deadlock."

11:48AM

Davis: We must be ready for 'no deal'

We're now on to press questions. Mr Davis is asked about his "high wire act of brinkmanship" and what he hopes to achieve from it.

He replies: "We are aiming for...a good, mutually beneficial deal overall. It's as simple as that. As for no deal, clearly this negotiation process is aimed at a good deal for sides. If that's not possible a government must be ready for the alternatives. "

11:46AM

'Rigorous examination' of bill underway, says Davis

There will be a "rigorous examination" of the technical background on the financial settlement to reach an agreement, says the Brexit secretary."

But he also warned that in order to address the issue, "we must talk about the future," in an appeal to the EU 27 to agree to move the talks onto trade in the near future.

11:44AM

Davis says 'common understanding' on protecting GFA

Mr Davis agrees there is more work to do on Northern Ireland, but he is "pleased to say we have made progress."

There is now a "common understanding" on how both sides can protect the Good Friday Agreement in all its dimensions.

He adds: "We owe it to people in Northern Ireland and people on the island of Ireland to get this right."

11:43AM

Davis: I want to reassure EU citizens

Mr Davis now has the floor. He says: "There has been some anxiety about citizens rights but I want to reassure EU citizens their rights will be enshrined in UK law. It will be a new, streamlined low cost process.

"Any UK residents in possession of a permanent residence card than simply exchange it for settled status, Mr Davis adds, insisting the process will not be complicated.

"This round of talks has brought us even closer to giving EU citizens the certainty they deserve,"

11:38AM

Barnier: There will be no concessions

Mr Barnier has really taken the gloves off.

He says: "We are not asking British for concessions and will not be built on concessions. There is no question of concessions on citizens rights and Ireland. As for the financial settlement there is no question of concessions for EU projects in Europe."

11:36AM

Barnier: UK refusal to hand over money is 'disturbing'

Mr Barnier hits out at the UK's refusal to fork out for the divorce bill. : "This week the UK repeated that it is still not ready to spell out [financial] commitments, so we have confined ourselves to technical discussions.

"On this question we have reached a state of deadlock which is very disturbing for thousands of project promoters in Europe and tax payers. "

11:35AM

Barnier: More work also needed on Nothern Ireland

Mr Barnier adds: "On Ireland, we advanced on the joint principles...of the joint common travel area. We continued intensive work on mapping areas of co-operation on a north-south basis.

"There is more work to do to have a full picture of the challenges facing the UK and therefore Northern Ireland leaving the EU framework. "

11:32AM

Barnier: Still disagreements on citizens rights

The press conference has begun. Mr Barnier has stressed the importance of meeting an agreement on citizens righst, Ireland and the divorce bill before moving into trade.

On the "priority" of citizens rights, he says the two sides are continuing to work towards an agreement, and that are still disagreements.

He says it is key that the European Court of Justice has ongoing control over the rights of EU citizens living in the UK.

11:26AM

Davis and Barnier upstaged by 'EU supergirl'

An activist wearing a supergirl outfit has appeared in the front row of the Brexit talks press conference.

This is EU Supergirl who is sitting in front row of Brexit talks press conference in Brussels pic.twitter.com/qtgf0GQT2F — James Rothwell (@JamesERothwell) October 12, 2017

She is Madelina Kay, 22, from Sheffield, who was in Brussels for an EU event on cities and regions. The author and illustrator will soon release an album called Rage Against the Brexit Manchine, which includes such as Pants to Brexit and No, Jeremy Corbyn.

The testy press conference, which was brightened by the appearance of the British anti-Brexit campaigner dressed as “EU Supergirl”, caps a frustrating week for British negotiators in Brussels, whose hopes of making progress on Ireland and citizens’ rights were dashed.

11:06AM

Asa Bennett: Deluded bid to stop 'no deal' Brexit would leave UK at EU's mercy

The Telegraph's Brexit commissioning editor Asa Bennett writes:

Sir Keir's stand against a "no deal" Brexit is typical of Jeremy Corbyn's Labour - offering little of use except virtue signalling. Labour MPs want Britain to agree a good deal.

But they cannot stop Britain crashing out of the bloc by voting for it not to happen.

All they will achieve is to leave Britain, when the clock ticks down, at the mercy of the EU.

10:32AM

John Bercow: MPs can vote against Brexit

John Bercow, the speaker of the House of Commons, appears to have sparked a row this morning after he claimed that MPs were well within their rights to vote against Brexit.

In a Q&A with the Hansard Society, he said: “There are actors on the stage who are very strongly supportive of Brexit who will tend to say the absolute responsibility now of members of parliament is simply to vote this through.

“But that is an opinion, rather than a constitutional fact.

View photos Commons Speaker John Bercow speaks in the House of Commons, London, as MPs gather to pay tribute to Labour MP Jo Cox More

"There will be some members of parliament who say, I want to be able at the end of all this if I’m not satisfied, to say no, to try to persuade other members of parliament to say no, and to hope that 'no' might delay Brexit or prevent Brexit.

“Do they have a right to argue that point of view? They absolutely do.”

10:19AM

David Davis arrives at European Commission

The BBC's Adam Fleming reports that Mr Davis has just arrived at the European Commission's headquarters in central Brussels.

The press conference is due to start fifteen minutes later than expected, at 11.15am UK time.

Brexit Secretary David Davis has just arrived at @EU_Commission with a wave for the BBC crew — Adam Fleming (@adamfleming) October 12, 2017

10:16AM

More pressure on EU to talk trade

British Chambers of Commerce chief Adam Marshall is due to warn later today that refusing to open trade talks as soon as possible will be a "lose-lose" scenario for both sides.

"It would be unforgivable for politicians on either side of the channel to privilege brinkmanship and disruption over thriving trade," he will tell business leaders in Birmingham.

His comments are the latest sign that businesses are increasingly rattled by the prospect of a "no deal" scenario unveiled by Theresa May in customs papers published earlier this week.