By William James and Gabriela Baczynska
LONDON/BRUSSELS (Reuters) - Britain and the European Union said on Sunday a lot more work would be needed to secure an agreement on Britain's departure form the bloc.
British Prime Minister Boris Johnson told his cabinet a last-minute deal was still possible as the two sides pressed on with intensive talks to try to avoid a disorderly Brexit on Oct. 31, the date set for Britain's departure.
"The Prime Minister said there was a way forward for a deal that could secure all our interests ... but that there is still a significant amount of work to get there and we must remain prepared to leave (without a deal) on October 31," a spokeswoman from Johnson's office said.
Britain said the latest talks had been "constructive" and there would be more talks on Monday.
Johnson hopes a deal will be agreed in time for EU leaders to approve it at a summit in Brussels on Thursday and Friday. But he would still have to convince a deeply divided British parliament to ratify the agreement, probably at a rare Saturday session on Oct. 19.
If he succeeded, the world's fifth largest economy would split from its biggest trading partner with arrangements in place to minimise disruption at borders and preserve the complex supply chains that underpin the economy.
If he failed, lawmakers would begin a battle to delay Brexit that could end up being decided in the courts. Johnson has said he would do his utmost to pull Britain out on Oct.31, even without a deal - a move he believes would boost his hopes of political survival.
"A lot of work remains to be done," the European Commission, the EU's executive, said in a statement on Sunday evening.
It said talks would continue on Monday and EU negotiator Michel Barnier would update the 27 member states - all except Britain - at a meeting in Luxembourg on Tuesday.
"Differences persist on customs," said an EU diplomat.
Underlining that there would be no technical Brexit negotiations at the summit itself, the diplomat said: "Small chances (remain) that a text could be ready for the summit and we won't negotiate at the summit. If talks are going well, we might say there is progress but more time is needed to continue."
A delay to the Oct. 31 departure date could still be required even if a deal were agreed in the coming days, as time would still be needed to fine-tune the deal.
"It's up to the Brits do decide if they will ask for an extension," European Commission head Jean-Claude Juncker said in an interview with Austrian media outlet Kurier. "But if Boris Johnson were to ask for extra time - which probably he won't - I would consider it unhistoric to refuse such a request."
Extension options range from as short as an extra month to half a year or longer and the other EU states would need to agree unanimously to grant it.
If Britain leaves the EU without a deal, experts have said there could be serious short-term disruption with possible food, fuel and medicine shortages, and long-term damage to Britain's reputation as a stable home for foreign investment.
The government says it is doing everything it can to secure a deal, and that it has contingency plans to mitigate the impact of any no-deal exit.
Ireland has been the toughest issue in the Brexit talks: specifically how to prevent the British province of Northern Ireland becoming a back door into the EU's markets without having border controls.
The sides fear that controls on the 500-km (300-mile) border with Northern Ireland would undermine the 1998 Good Friday Agreement which ended three decades of sectarian conflict that killed more than 3,600 people.
The Sunday Times reported that Johnson would speak to German Chancellor Angela Merkel, French President Emmanuel Macron and Juncker by the end of Monday.
Since becoming prime minister in July, Johnson has pushed 21 lawmakers out of his ruling Conservative party for not backing his Brexit plans, and is short of a majority in parliament.
The three main opposition parties - Labour, the Scottish National Party and Liberal Democrats - are expected to oppose any final Brexit deal he might obtain.
That leaves Johnson's hopes pinned to a group of Labour rebels and the small party which notionally keeps him in power, Northern Ireland's Democratic Unionist Party. The DUP position is unclear.
(Additional reporting by Foo Yun Chee, Editing by Guy Faulconbridge, Emelia Sithole-Matarise and Timothy Heritage)