Irish showdown to determine fate of Boris Johnson's Brexit plan

The EU left only a remote possibility that Britain could salvage a Brexit deal at a meeting between Boris Johnson and Irish Prime Minister Leo Varadkar, expected to take place on Thursday.

European officials said they had gone as far as they could to explore a new British proposal to amend the withdrawal agreement struck last year but never ratified.

The sticking point is British territory Northern Ireland's place in the EU's Customs union.

Michel Barnier, the EU negotiator, said Mr Johnson's latest proposal took a legal, permanent solution and turned into a temporary measure that was not acceptable to the EU.

"As I speak to you now, we're not on the point of envisioning and finding a deal," Mr Barnier told the European Parliament.

Jean-Claude Juncker, President of the European Commission, said he had not given up hope on negotiations, which resumed last week ahead of an October 31 deadline for the British exit from the EU.

"As it stands, we will remain in discussion with the United Kingdom on the terms of its departure and, personally, I don’t exclude a deal," Mr Juncker said.

"We, Michel and myself, are working on a deal. And we are not accepting this blame game that started in London."

Preparations are continuing for discussions between Mr Johnson and Mr Varadkar.

Officials said the meeting would take place in north-west England on Thursday and would be private, with no media presence.

Mr Johnson had cleared his diary to meet European leaders this week but meetings did not eventuate.

A call with Angela Merkel, the German Chancellor, was said to have ended badly on Tuesday after a "full and frank exchange of views" – diplomatic code for an argument.

Mr Varadkar has warned that the differences between the two sides could be too wide to bridge in such a short time.

"There are some fundamental objectives that haven't changed for the past three years and we need them guaranteed," he said.

"I think it is going to be very difficult to secure an agreement by next week, quite frankly.

"Essentially what the United Kingdom has done is repudiate the deal that we negotiated in good faith with prime minister [Theresa] May's government over two years and sort of put half of that now back on the table, saying, 'That's a concession'.

"And of course it isn't, really."

British Brexit Minister Steven Barclay is due to have lunch with Mr Barnier on Thursday to examine political options.

Both sides had been hoping for enough common ground to seal a deal at an EU summit on October 17.

Meanwhile, the British government is expected to call a special Saturday sitting of Parliament after that EU summit.

Parliament has only rarely met on Saturday, during the Falklands war in 1982 and the Suez crisis in 1956.

The session will be convened on October 19 regardless of the summit outcome.

As such it represents a leap in the dark. Mr Johnson could present a vote on leaving or remaining in the EU at a showdown with MPs who have blocked every other option.

The Bank of England said on Wednesday that lenders, insurers, brokers and the broader financial system were prepared for a worst-case departure.

In that case, UK assets would fall sharply along with the pound, but banks hold more than £1 trillion in liquid assets to meet obligations without fresh funding for many months, the central bank said.

Stock market traders said that companies were making special provision for round-the-clock deals if no agreement is locked in during the week starting on October 21.

Impediments to travel, transport and shipping are not expected to emerge until the week of November 4.