Brussels believes that Britain will leave the EU without a deal after accepting that Boris Johnson "isn’t bluffing".
EU leaders are now working on "a working hypothesis of no deal" following a meeting on Monday between Commission officials and Brexit diplomats from each of the 27 EU countries, amid mounting speculation Mr Johnson will call a general election after October 31.
It comes as all government departments in Whitehall were given a 48-hour deadline to prove their readiness for no deal. The EU-27 is understood to be shaken by reports that Dominic Cummings, Mr Johnson’s chief strategist, has said it is too late for MPs to prevent a no deal exit on Halloween.
EU officials had been confident that Mr Johnson would not force Britain out without a deal but meetings with his senior adviser David Frost last week have changed their minds along with newspaper articles including a confrontational opinion piece written by Brexit Secretary Stephen Barclay.
"Our working hypothesis is now no deal," said an EU source after the meeting, where diplomats agreed they could not rely on MPs to prevent a disorderly withdrawal.
“It was clear UK does not have another plan,” a senior EU diplomat said of the meetings with Mr Frost. “No intention to negotiate, which would require a plan. A no deal now appears to be the UK government’s central scenario"
Mr Johnson is yet to meet any EU leaders or officials in person, which has surprised Brussels and added to the conviction Mr Johnson is not prepared to compromise.
On Monday, Mr Cummings allegedly threatened Downing Street staff with the sack if they try to block no deal during a blistering attack on Remainer former cabinet ministers who he accused of ‘frustrating’ Brexit during their time in office.
The former Vote Leave boss “absolutely tore into” former chancellor Philip Hammond and Greg Clark, the former business secretary, during the 7.55am meeting at Number 10, when he called on SpAds to detail the status of every government department’s no deal planning by Wednesday morning.
“He basically said that Hammond and Clark had not only failed to prepare for no deal but actively blocked it,” said an insider. He said: ‘I know what’s happened is not your fault - it’s Hammond and Clark’s fault. He absolutely tore into them.
“But then he said: ‘If you don’t flag problems now and they blow up in the next two weeks then it will be your fault. He said he wanted a note from all government departments in the next 48 hours detailing what they had done to prepare for no deal and what more needed to be done.”
A source close to Mr Cummings confirmed he had said Mr Hammond and Mr Clark “did not want the country to be ready for no deal for political purposes” and “neglected all sorts of things.”
EU officials are now viewing the October EU summit in Brussels as the "no deal Brexit summit", whereas before they had expected EU-27 leaders to mull over another British request to extend the Article 50 deadline.
It comes as Mr Frost, known as Mr Johnson’s EU sherpa, reportedly told the EU that Britain planned to negotiate a free trade agreement with Brussels after a no deal Brexit.
Brussels is still expected to ask for a backstop style solution for the Irish border and payment of the £39 billion pound Brexit bill as a condition for opening trade talks after no deal.
Diplomats are now waiting to hear what Mr Johnson tells EU leaders when he meets them in the margins of the G7 meeting in France later this month but there is no expectation that will change the situation.
Before the meeting in Brussels, the European Commission insisted that it would not be to blame if there was a no deal Brexit. A spokeswoman said that no deal would hurt both the UK and the EU, with a “serious economic impact” on Britain “proportionally higher” than in Europe.
In March the EU said it had completed its no deal Brexit plans - a package of 46 measures are designed to mitigate the worst impact, including the loss of British payments into the EU budget and compensate EU fisherman for Brexit-related losses.
The measures cover the financial sector, transport and travel, customs and the export of goods, climate policy, agriculture and fisheries, social security coordination, and international trade.
“For a negotiation to be successful it takes two to tango,” the spokeswoman added. “If the music and the rhythm is not right then well then you have no dance but that doesn’t mean that it was a failure.” The spokeswoman said the EU was sticking to its red line that it would not renegotiate the Withdrawal Agreement. Mr Johnson insists that it must be renegotiated and the Irish backstop removed.
The Prime Minister’s spokesman reiterated that removing the “undemocratic” backstop from would represent “significant progress”, suggesting that the government could be tempted to bring the Brexit deal back to the Commons if the major concession was made.
But he added that Britain will be leaving the EU on October 31 "whatever the circumstances".
As reported in the Sunday Telegraph, Mr Cummings has told ministers that even if the Government lost a vote of confidence when Parliament returns in September Mr Johnson could remain in power by delaying an election until after October 31 by which time, under current legislation, Britain would be out of the EU.
Health Secretary Matt Hancock said he agreed with Mr Cummings, who is reportedly preparing for a "people versus the politicians" poll if MPs again seek to frustrate the 2016 referendum result.
The Tory rebels’ numbers have been potentially boosted by the so-called ‘Gaukeward squad’ of former cabinet Remainers, including former justice secretary David Gauke, Mr Hammond and Mr Clark.
An ally of Mr Hammond said Mr Cummings’ claim about him blocking Brexit was “not a fair accusation”.