Theresa May is facing a high-pressure race against time to make progress in Brexit talks amid a deadlock over the Irish border which threatens to drag on until the new year.
The Prime Minister is hoping to make a new offer by Friday to satisfy both Ireland and the Northern Irish Democratic Unionist Party which props up her Government and scuppered a deal on divorce issues on Monday.
Pressure is growing on Mrs May to get leaders at the December 14 European Council summit to declare sufficient progress has been made on divorce issues so trade talks can begin, with business chiefs warning companies will activate contingency plans that will cost Britain jobs if there is further delay.
After talks in Dublin, Irish Taoiseach Leo Varadkar and Dutch PM Mark Rutte made clear the EU would not compromise and allow the Irish border to be kicked down the road to phase two of the talks, even under threat of Britain crashing out with no deal or divorce negotiations dragging on to 2018.
And after a phone call with Mrs May on Wednesday, Mr Varadkar said the PM was hoping to return with a new formal written offer “tonight and tomorrow”, but warned if there was no agreement talks would be picked up in the New Year.
Downing Street said Mrs May told Mr Varadkar she was “working hard to find a specific solution to the unique circumstances in Northern Ireland” and was committed to “moving together to achieve a positive result on this”.
The PM also spoke with DUP leader Arlene Foster, whose rejection of plans for “regulatory alignment” between Northern Ireland and the Republic led to the collapse of a proposed deal on Monday.
But it is understood Mrs Foster has no immediate plans to fly to London for talks with Mrs May and any such move would depend on progress in negotiations between the DUP and the Government in London.
Confederation of British Industry (CBI) president Paul Drechsler underlined businesses’ “immediate” need for a transition deal, telling the City of London Corporation: “Or 60% of firms with contingency plans will have put these into effect by Easter. That means jobs leaving the UK - in most cases irreversibly.”
Meanwhile, senior ministers came under attack over their positions on Brexit as Chancellor Philip Hammond revealed the Cabinet had not yet discussed details of the UK’s preferred long-term relationship with the EU.
Mr Hammond also received a slapdown from Downing Street after suggesting it was “inconceivable” the UK would not pay a financial settlement to the EU, regardless of whether it obtains a trade deal.
The Prime Minister’s official spokesman swiftly said the payment - estimated at up to £50 billion - was “dependent on us forging (a) deep and special future relationship with the EU”.
And opposition MPs demanded that Brexit Secretary David Davis be sacked and face investigation for contempt of Parliament after admitting his department had produced no impact assessments of the likely effect of Brexit on different sectors of the UK economy.
As conflicting reports suggested the EU was considering when exactly Mrs May would pass the point of no return in her hopes to get an agreement on “sufficient progress” before next week’s summit, Mr Varadkar warned in the Irish Dail: “We want to move to phase two but if it is not possible to move to phase two next week because of the problems that have arisen, well then we can pick it up of course in the new year.”
Later in a press conference alongside Mr Rutte, he said Mrs May “wants to come back to us with some text tonight and tomorrow”.
Mr Rutte said they “will not loosen” their position on the “fundamental” points of citizens’ rights, the exit bill and the border.
Elsewhere, 19 Remain-backing Tory MPs wrote to Mrs May to condemn “highly irresponsible” Brexit-backing colleagues who “seek to dictate terms” that could leave Britain leaving the EU with no deal as negotiating pressure mounts.
Among the signatories to the letter were former cabinet ministers Nicky Morgan, Dominic Grieve and Stephen Crabb, as well as select committee chairs Sarah Wollaston and Bob Neill.
Brexit-backing Conservative MP Bernard Jenkin said the UK must not give up its goal of “regulatory autonomy” after Brexit.
He accused the European Commission of being “intransigent” over refusing to discuss trade until divorce issues were dealt with, and said Brussels had been using the Republic of Ireland as a “proxy” in order to prevent the creation of an open frontier on the EU’s border.
Mr Jenkin told BBC Radio 4’s Today programme: “I don’t think we should walk away, but I do think we should take a firm line, as the Prime Minister did earlier this week.
“We shouldn’t be allowing ourselves to be bullied into promising more and more money or giving up the goal of regulatory autonomy or being dragged into a long period of uncertainty without clarity on what we are getting at the end of it.”
Accusing the EU of being “in breach of their own treaty” in refusing to negotiate the UK’s withdrawal in the context of the future trade relationship, Mr Jenkin asked whether Brussels was “seriously going to inflict harm on yourselves and harm on the United Kingdom by carrying on refusing to negotiate about what really matters”.
Transport Secretary Chris Grayling, one of the most prominent Brexiteers in the Cabinet, said: “I remain absolutely optimistic that we will reach a successful point, we will move on to the trade talks, because ultimately it is in everybody’s interests for that to happen.”
Businesses in the Republic of Ireland would suffer if no agreement was reached on the border, he warned.
“If you are running a business in the Republic of Ireland and shipping foods to the EU, the relationship with the UK is pretty fundamentally important, because your goods need to go through the UK,” he said.
Mr Grayling declined to discuss the progress of Mrs May’s efforts to construct a deal acceptable to all sides, but said that talks were “ongoing” ahead of next week’s European Council.
He said that the “regulatory alignment” proposed by the Prime Minister in Monday’s text did not involve laws within the post-Brexit UK being the same as those in the rest of Europe.
“We don’t have to have, we have never said we will have and we don’t want a situation where in future our laws are identical to those of the EU,” he said.
“There will be areas where we do things in a very similar way, there are will be areas where we don’t do things in a similar way.
“That’s all the Prime Minister was seeking to achieve, to make sure we can ensure that trade flows as freely as possible across the border of Northern Ireland and southern Ireland.”
Answering questions after a speech at the Foreign Office in London, Foreign Secretary Boris Johnson declined to comment on the progress of Brexit negotiations, but said it was time for the EU and Britain to “get going” with the second phase of talks.
Mr Johnson said he was “not going to give a running commentary” on the state of talks with the DUP and Irish Government.
But he added, breaking briefly into French: “We need to get going, franchement (frankly), with the second part of the talks. That’s the exciting bit. That’s the bit where we will achieve a new trading relationship with our friends and partners.
“We can get it done, we just need to get on with it, and I hope very much that the December European Council will mark that progress.”