EU leaders have called for post-Brexit trade talks to continue beyond the end of the week – the deadline suggested by Boris Johnson.
At a two-day summit in Brussels, they said progress in key areas was “not sufficient” to reach a deal.
And in a summit conclusions document, they urged the UK to make the “necessary moves” towards striking an agreement.
No 10 says the prime minister will decide the “next steps” on Friday.
Both sides are calling on each other to compromise on key issues, including fishing and limits on government subsidies to businesses.
They are seeking an agreement to govern their trading relationship once the UK’s post-Brexit transition period ends in December.
Mr Johnson expressed “disappointment” at recent progress in a pre-summit call with EU Commission President Ursula von der Leyen on Wednesday, according to Downing Street.
As the summit got under way, Mrs von der Leyen said she would be self-isolating for the second time in a month after a member of her staff tested positive for Covid-19.
In a tweet, she added she had tested negative herself but would be leaving the summit “as a precaution”.
In a conclusions document issued after the discussion on Brexit, the EU expressed “concern” that not enough progress has been made in key areas for a deal to be reached.
It added that the EU would “step up their work” for all possible outcomes, including the possibility a deal is not reached before December’s deadline.
Downing Street said the UK’s chief negotiator Lord Frost has returned to London and updated Mr Johnson on the “state of play”.
On Wednesday, a No 10 spokesman said Mr Johnson would “reflect” on the outcome of the summit “before setting out the UK’s next steps.”
Covid ‘motivating factor’
Arriving at the summit, French President Emmanuel Macron said his country’s fishermen would not “in any situation” be “sacrificed to Brexit”.
“We didn’t choose Brexit. Preserving access for our fishermen to British waters is an important point for us,” he told reporters.
The taoiseach (Irish prime minister) Micheál Martin said a deal was still possible “within the timeframe available to us”.
He told the BBC a no-deal outcome would represent a “significant additional shock to our societies” on top of the Covid-19 pandemic.
“That is a motivating factor in seeking to arrive at a comprehensive deal,” he added.
Dutch Prime Minister Mark Rutte said: “”It would be crazy for the outside world if the UK and the EU will not be able to come to an agreement”.
EU leaders are not yet all on the same page when it comes to how much they should give up or give in to get a deal.
Brussels keeps calling on the UK to make concessions but a successful outcome will require compromises on both sides.
Will France’s Emmanuel Macron relinquish his hard-line position about keeping current fishing quotas in UK waters? He’ll have to, to get a UK deal.
Will Germany’s Angela Merkel give way on some demands on competition regulations (aka the level playing field) yet still grant the UK zero tariff, zero quota access to the single market?
EU leaders must agree all this amongst themselves and it won’t be straightforward.
Why does 15 October matter?
Over the summer, both the UK and EU seemed to agree the end of October was the final date to get a deal done – allowing enough time for it to be ratified before 31 December.
But come 7 September, Boris Johnson decided to shorten the deadline.
He said if a deal wasn’t reached by 15 October, “then I do not see that there will be a free trade agreement between us, and we should both accept that and move on”.
Thursday is that day – but Downing Street appears to have moved back from it as a hard deadline.
Formal negotiations ended at the start of October, but Mr Johnson and Mrs von der Leyen pledged to “intensify talks” over the coming weeks.
Pressed on whether the UK would walk away on 15 October, the government’s chief negotiator Lord Frost said it was his job to “advise the prime minister” on whether a deal was on the cards by then.
By remaining in the bloc’s single market and customs union, the UK has continued to follow EU trading rules during its post-Brexit transition period.
This 11-month period is due to end in December, and the UK has ruled out seeking an extension.
Formal talks began in March and continued throughout the pandemic, initially via video link before in-person discussions resumed over the summer.
If a deal is not done, the UK will trade with the EU according to the default rules set by the World Trade Organization.