Boris Johnson and European Commission President Ursula von der Leyen will hold a telephone call this afternoon as Brexit trade talks go down to the wire.
The prime minister will speak with the EU chief at 4pm (5pm in Brussels) to assess whether a post-Brexit trade agreement can still be reached.
It will be the pair’s second phone call within 48 hours, after they agreed on Saturday to make a “further effort” to reach a deal, despite months of deadlock on key issues.
Saturday’s phone call between Mr Johnson and Ms von der Leyen preceded another day of negotiations, which continued late into Sunday night.
However the EU’s chief negotiator, Michel Barnier, was said to have been “very gloomy” about the prospects of a deal when he spoke to the bloc’s national ambassadors on Monday morning.
Irish foreign minister Simon Coveney told RTE news: “Having heard from Michel Barnier this morning, really the news is very downbeat.
“I would say he is very gloomy, and obviously very cautious about the ability to make progress today.”
One EU diplomat said: “EU-UK negotiations have entered the endgame, time is running out quickly.
“Despite intensive negotiations until late last night, the gaps on level playing field, governance and fisheries are still not bridged.
“The outcome is still uncertain, it can still go both ways.”
Meanwhile, an EU source told Sky News they were “not expecting anything substantial yet” although they predicted “some more drama” and said trade talks were “moving in the right direction on fishing”.
Downing Street said on Monday that “significant differences remain on critical issues”, including fisheries, which was still being negotiated by the UK’s team in Brussels.
The prime minister’s official spokesman said: “Our negotiations are ongoing but we remain committed to trying to reach a free trade agreement, and that is what our team is there trying to achieve today, but we are clearly in the final stages now.”
The spokesman also said the UK government was “prepared to negotiate for as long as we have time available if we think an agreement is still possible”, after Mr Barnier reportedly told members of the European Parliament the deadline for talks succeeding is Wednesday.
The EU’s national leaders will gather for a summit in Brussels on Thursday, which will come just three weeks before the end of the Brexit transition period on 31 December.
The pound fell by more than two cents against the US dollar on Monday morning to just over $1.32 as investors grew more anxious about the possibility of a no-deal outcome.
It was a sharp reverse from market optimism over the talks last week which saw sterling climb above $1.35 for the first time this year.
The timing of the prime minister’s call with Ms von der Leyen means it will likely come before the UK government plans to push ahead with controversial Brexit legislation that could allow the UK to break international law.
The Internal Market Bill, which has been condemned by critics both in Westminster and across European capitals, seeks to allow ministers to override the Withdrawal Agreement – the UK’s divorce deal with the EU that was agreed last year.
The government has admitted the legislation could see the UK breach international law, but argue it is needed to protect the integrity of the UK and the Good Friday Agreement in Northern Ireland.
However, in a sign progress could yet be made on Irish border issues, it was announced senior cabinet minister Michael Gove would meet with European Commission vice-president Maros Sefcovic in Brussels on Monday.
A UK government spokesman said the pair would meet to “discuss issues related to their work as co-chairs of the Withdrawal Agreement Joint Committee”.
“The Withdrawal Agreement Joint Committee oversees UK and EU implementation, application and interpretation of the Withdrawal Agreement, including the Northern Ireland Protocol,” they added.
“The work of the Joint Committee is separate from the ongoing free trade agreement negotiations.”
Mr Sefcovic posted on Twitter that the two sides would be “working hard” to make sure post-Brexit arrangements for the Irish border were “fully operational” on 1 January, after the end of the Brexit transition period.
It has been speculated that successful talks between Mr Gove and Mr Sefcovic, as well as the conclusion of a UK-EU post-Brexit trade agreement, could see the UK government later drop the most contentious parts of the Internal Market Bill.
Last month, the House of Lords removed the most controversial clauses of the Internal Market Bill from the proposed legislation.
But Foreign Office minister James Cleverly told Sky News’ Kay Burley those clauses would be reintroduced to the bill when it returns to the House of Commons today, with MPs set to vote on whether to keep or scrap the Lords’ amendments this evening.
“It contains clauses that we may need to rely on and, if we do need to rely on them, better that they’re there,” Mr Cleverly said.
Asked whether it was worth risking the EU’s anger by reintroducing the controversial legislation in full, Mr Cleverly replied: “Not having that in place would weaken our position and actually give an advantage to the EU negotiators.
“And, in a negotiation like this, it is really key that both parties negotiate hard – I’m sure the EU negotiators are negotiating hard, but so is David Frost (the UK’s chief negotiator) and our negotiating team.
“We do it in a spirit of positivity, but we do want to get a deal that works for the UK, an agreement that works for the UK.”
Without a post-Brexit trade deal being agreed by the end of this month, the EU and UK are likely to have to trade on World Trade Organisation rules with tariffs imposed in both directions.