The United Kingdom is likely to leave the European Union without a trade deal in just under three weeks' time, Prime Minister Boris Johnson and European Commission chief Ursula von der Leyen say.
Britain quit the EU in January but remains an informal member until 31 December - the end of a transition period during which it has remained in the EU single market and customs union.
Both sides say they want to agree to arrangements to cover nearly $1.3 trillion AUD in annual trade but talks are at an impasse.
European Commission chief Ms von der Leyen told EU leaders that a no-deal was more likely than a deal, an official said.
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"It's looking very, very likely we'll have to go for a solution that I think will be wonderful for the UK, we'll be able to do exactly what we want from January 1, it will obviously be different from what we set out to achieve," Mr Johnson told reporters.
"If there's a big offer, a big change in what they're saying then I must say that I'm yet to see it," he said.
Mr Johnson and Ms von der Leyen have given negotiators until Sunday evening to break the impasse at talks that are deadlocked over fishing rights and EU demands for Britain to face consequences if in the future it diverges from the bloc's rules.
But Irish Deputy Prime Minister Leo Varadkar said on Friday that he would not be surprised if negotiations between the UK and the EU drag on for a few more days and there is a last-minute trade deal.
"It's very often the case that these deals are done at the last moment because everyone needs to be sure it was the best deal possible and there is nothing else left on the table," Mr Varadkar told reporters.
"I wouldn't be surprised if it drags on for a few days and the deal is only clinched at the last minute," Mr Varadkar said, sharing the Irish foreign minister's hopes earlier on Friday that a deal can still be done.
