The European Union told Britain on Friday that it was time to make a decision on a Brexit trade deal after a last-minute problem in talks prompted London to say chances of a breakthrough were receding.
With less than four weeks left until the United Kingdom finally exits the EU's orbit on 31 December, both sides are asking each other to compromise on fishing, state aid and how to resolve any future disputes.
Ultimately, Prime Minister Boris Johnson, the face of the 2016 Brexit campaign who is now grappling with Europe's highest official COVID-19 death toll, will have to decide whether he and Britain would be better off making compromises or walking away.
As talks go down to the wire, a senior British government source said on Thursday that, while a deal was still possible, the prospect of a breakthrough was slipping after the EU pushed for more concessions.
European Council President Charles Michel said the next few days would decide matters and the 27 EU leaders holding a virtual summit on 10-11 Dec would take a position.
"The real question is - Which political, economic, social project do they want for their own future?" Michel told a news conference. "And this is a question for the British government and for the British people."
One EU official said a deal was expected by the end of the weekend. EU chief negotiator Michel Barnier will stay in London on Friday to continue talks.
As investors tried to figure out if the rhetoric was a sign of final haggling or serious trouble, a gauge of how volatile the pound is expected to be over the next week rose to its highest level since March.
Britain formally left the EU on 31 January but has been in a transition period since then under which rules on trade, travel and business remain unchanged. From the end of the year, it will be treated by Brussels as a third country.
If the two sides fail to reach a deal, the five-year Brexit divorce would end in disorder just as Europe grapples with the vast economic cost of the COVID-19 outbreak.
A no-deal exit is the nightmare scenario for businesses and investors who say it would snarl borders, spook financial markets and sow chaos through supply chains that stretch across Europe and beyond.
"If one side of the table rejects (a tentative agreement), it's a 'no-deal'," Michel said. "We will need to assess what will be probably on the table.
A British source said the EU had disrupted talks by trying to force further concessions at the last minute.
"At the 11th hour, the EU is bringing new elements into the negotiation. A breakthrough is still possible in the next few days but that prospect is receding," a government source said.
French European Affairs Minister Clement Beaune told Europe 1 Radio there was still a risk that talks would fail but added, "I want to tell our fishermen, our producers, the citizens who are listening that we will not accept a deal with bad terms.
"If a good agreement cannot be reached, we will oppose it. Each country has a veto right, so it is possible ... We will do our own evaluation of this draft deal, if there is one."
EU Brexit negotiator Michel Barnier, who is in London, is due to update 27 national envoys to Brussels on Friday by video conference.
EU sources said discussions centred around the "level playing field", meaning agreed principles on state aid and minimum labour and environmental standards, as well as the "effective remedies" that each side could take in case of suspected infringements.
"We are at a critical phase," Business Secretary Alok Sharma told Sky TV. "It is fair to say that we are in a difficult phase, there are some tricky issues still to be resolved."