British cabinet ministers gathered Tuesday morning.
On their agenda were the seemingly fast-fading chances of a Brexit deal.
Earlier German Chancellor Angela Merkel spoke to UK Prime Minister Boris Johnson on the phone.
A Downing Street source says she called a Brexit agreement based on his latest proposals 'overwhelmingly unlikely'.
She reportedly said any deal must see Northern Ireland stay in the EU customs union.
That's something the latest UK proposals rule out.
The Downing Street source said a deal was now all-but impossible as a result.
But the European Commission denied claims that negotiations had ended:
(SOUNDBITE) (English) EUROPEAN COMMISSION SPOKESWOMAN, MINA ANDREEVA, SAYING:
"Technical talks are continuing today so I don't see how talks could have actually been broken down if they are happening today and in the days to continue.
The UK's opposition Labour party said the Downing Street briefings were an attempt to sabotage any deal.
European Council chief Donald Tusk also saw an attempt to scapegoat Brussels.
In a tweet he told Johnson that 'what's at stake is not winning some stupid blame game'.
Meanwhile, the UK government set out its latest plans, and promised tariff-free access for most goods in a no-deal scenario.
But a new assessment suggests economic pain is certain.
The independent Institute for Fiscal Studies says Britain's budget deficit will more than double if there's a no-deal departure
They estimate it would hit more than 100 billion pounds - about 123 billion dollars - and prompt a swift return to austerity measures.