Emmanuel Macron has been accused of risking a no-deal Brexit by making the “massive miscalculation” that Britain will be forced back to the negotiating table in the new year.
Downing Street believes Mr Macron is standing in the way of a deal because he is playing to his domestic audience ahead of elections in 18 months’ time.
A deadline of 11pm Sunday night – set by MEPs for a deal to be agreed in order for it to be ratified by December 31 – passed without any conclusion to the talks.
The UK has said it will not walk away from the negotiations while there is still time to reach an agreement.
Negotiators believe Mr Macron is gambling on the theory that no deal will be so unpopular in Britain that Boris Johnson will cave in and accept Brussels’ current offer within weeks of leaving the single market and customs union on January 1.
But senior Government sources have dismissed the idea as “fantasy” and insisted that it “makes no sense” to reject a deal now only to accept it weeks later.
One source said: “If we leave without a deal there will inevitably be criticism of the Government, even though the Prime Minister has made it clear we will thrive either way.
“Why on earth would we go through that if we intended to go back to Brussels cap-in-hand a few weeks later and accept a deal we have already rejected?
“If Emmanuel Macron thinks that’s what’s going to happen he has made a massive miscalculation.”
UK sources once again made clear on Sunday that there could only be a deal if there was a “substantial shift” in the EU’s position.
The issues of fishing rights and “level playing field” rules remain the two key areas of difference, and Michel Barnier, the EU’s chief negotiator, said the bloc “remains committed to a fair, reciprocal and balanced agreement. We respect the sovereignty of the UK. And we expect the same”.
A UK Government source said: “Unfortunately, the EU are still struggling to get the flexibility needed from member states and are continuing to make demands that are incompatible with our independence.
“We cannot accept a deal that doesn’t leave us in control of our own laws or waters.”
The European Commission’s latest offer on fish is to give back 25 per cent of its quota, with a six-year transition period. Britain has offered a three-year transition and wants 60 per cent of the quotas returned.
If a deal is reached before December 31 it could be provisionally applied, which does not need a European Parliament vote. MEPs would still have to confirm the agreement with a vote in the new year.
On Sunday night, Nicola Sturgeon, Scotland’s First Minister, said it was now “imperative” that Mr Johnson seek an agreement to extend the Brexit transition period.
“The new Covid strain and the various implications of it mean we face a profoundly serious situation, and it demands our 100 per cent attention. It would be unconscionable to compound it with Brexit,” she said.