"We hear from London that the United Kingdom government is preparing for a "no deal" scenario".
A report that aerospace manufacturer BAE Systems is planning to cut more than 1 000 jobs can only add pressure for May to press her case for the European Union to move beyond talks on the divorce settlement, the rights of expatriates and the border with EU-member Ireland.
She had to fend off a challenge from up to 30 of her lawmakers who had been pushing for her to quit following a disastrous snap election in June which saw the ruling Conservatives lose their parliamentary majority.
European Union leaders called her suggestions positive but asked for more details.
May said progress was being made on all three, and "there is considerable agreement" between the United Kingdom and the bloc on citizens' rights.
But the EU stuck to its terms: "There is a clear sequencing to these talks and there has been so far no solution found on step one, which is the divorce proceedings", European Commission spokesman Margaritis Schinas told a regular briefing.
May, who was due to host businesses later in the day to listen to their Brexit concerns, is keen to push the talks beyond a discussion of the divorce to try to offer firms some certainty about future trading conditions. A senior government source last night said contingency plans would be stepped up after Christmas if Brussels continued to drag its feet.
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She also outlined proposals for new laws to set tariffs and quotas - including options if Britain ends the talks with no agreement in place.
Britain wants to move to stage two fast, but in order to keep as much leverage as possible in talks on the future relationship aims to delay agreeing the financial settlement as long as possible.
Labour Party leader Jeremy Corbyn accused the government of making a mess of the Brexit negotiations.
"We are negotiating in good faith, and we still hope that the so-called "sufficient progress" will be possible by December".
On Thursday, Germany's BDI industry federation said companies must prepare for a "very hard" Brexit after a tumultuous UK Conservative Party conference that left Prime Minister Theresa May's authority weakened.
"Lunch was good and we had constructive talks, not the first time or the last time", Barnier told reporters outside the residence of the UK's permanent representative in Brussels.
Some have suggested that May will reshuffle her cabinet, but her spokesman said she had full confidence in both ministers.
She warned that their rights could "fall away" and also admitted that "we don't know" what would happen under those circumstances to the 1.2m Britons living in the EU. 'We don't believe we will leave without a deal.