European Union says there has been ‘no breakthrough’ in Brexit talks

Losing the party's support in the Commons would mean possible defeat on the budget and a no-confidence vote for Theresa May

Losing the party's support in the Commons would mean possible defeat on the budget and a no-confidence vote for Theresa May

Scottish Minister David Mundell suggested the DUP would come around, saying the alternative was either a government led by opposition Labour leader Jeremy Corbyn or a Brexit next March without any deal at all.

Speaking to reporters in Brussels, Margaritis Schinas said: "We are not there yet". There is no breakthrough yet. "Michel Barnier and his team are working day and night to reach a deal, but we are not there yet", he said.

The warning, amid continued opposition from May's own Conservative MPs to her Brexit strategy, further raised the stakes as negotiators seek a breakthrough ahead of a summit of European Union leaders on October 18.

That saw the pound (GBPUSD=X) rise against the dollar, but European Union officials said Barnier had not given such an upbeat assessment.

The threat to vote down the Budget will put pressure on the Cabinet to deliver a deal in which the whole of the United Kingdom remains in a temporary customs union with the EU until a solution is found which would avoid regulatory or customs checks on the Irish border.

He reiterated the EU's line welcoming May's proposals for a bold free-trade deal "without tariffs or quotas" and close security ties after Brexit.

For industrial goods, he said it could be done by "market surveilance authorities", on-site in the companies.

That is likely to be enough to get a deal over the line at next week's European Council, which has been dubbed the "moment of truth" for Brexit negotiations.

Shortly after the meeting began, the DUP leader, Arlene Foster, said that May and her cabinet colleagues who had told her they were unionists "could not in good conscience recommend a deal which places a trade barrier on United Kingdom businesses moving goods from one part of the kingdom to another".

"We both agreed that there were chances for a sensible treaty solution", said the senior ally of German chancellor Angela Merkel, "and that strengthens me in the belief that at the current time there is no reason to speculate about possible negative consequences".

Theresa May is having a tougher time convincing her own MPs and those of the DUP, who prop-up her government.

If the DUP votes against the budget, which will be presented on October 29, this could trigger a confidence motion and a general election if the government loses.

Numerous problems are now being solved on a step by step basis "but there are, of course" several big issues which we really need to get to grips with, ' the prime minister said.