According to the reports, Germany and France are demanding divorce bill cash from Britain before talks on a two-year transition deal go ahead.
UK officials had hoped talks of transition would be on the table at a high-profile Brussels summit in two weeks.
But, a German-led group of EU countries has urged for more clarity on the cash Britain will pledge to cover its financial commitments.
Speaking to Sky News, Mr Rentoul said: “I had assumed that Barnier does have a personal incentive to reach a deal.
“It would advance his ambitions to succeed Juncker, as Commission President.
“But, of course, Merkel and Macron want to stop him going any further and that means you have to first sort out the final bill.
“It’s very difficult how we get to a position where we get a deal at this point because there is very little time to agree on the terms of our relationship after we exit.”
Michel Barnier, the EU’s chief negotiator, underlined the benefits of opening talks on a transition deal at a meeting this month.
He indicated it would create space to resolve major issues on an exit bill and recognise Mrs May’s generous stance.
But Berlin and Paris rejected the standpoint according to diplomats.
The shock infighting puts the possibility of a no deal high on the agenda.
Germany’s biggest business lobby has warned members to prepare for a “very hard Brexit” following the stalemate.
Theresa May has admitted that her cabinet has been preparing for a no-deal scenario behind closed doors.