Brexit deal hangs in balance; Johnson says failure 'very likely'

The Brexit trade deal between Britain and the European Union appears to be hanging in the balance after gloomy assessments from leaders on both sides of the Channel.

Notably, there are just hours left before last-gasp talks conclude.

Prime Minister Boris Johnson and European Commission chief Ursula von der Leyen have given their negotiators until Sunday before a decision is made on whether to keep talking or give up.

The mood worsened after von der Leyen told EU leaders at a marathon Brussels summit there were "low expectations" and the "probability of a no-deal is higher than of a deal".

Ireland and Germany tried to raise spirits, agreeing that a pact was "difficult but still possible".

But Johnson said it was looking "very, very likely" that Britain would end up dealing with its biggest single trading partner on World Trade Organization (WTO) terms from the New Year.

"If there's a big offer, a big change in what they (the EU) are saying then I must say that I've yet to see it," he told reporters.

The comments did nothing to inspire confidence in the British pound, which extended its losses on currency markets, dropping more than one percent against the dollar.

UK chief negotiator David Frost and his EU counterpart Michel Barnier are trying to carve out a deal by Sunday, with just three weeks left until the end of a transition period following Britain's departure from the bloc in January.

Whatever happens, Britain will leave the EU single market and customs union, leading to the re-introduction of border checks for the first time in decades.