Michel Barnier, the EU's chief negotiator, has branded the UK's refusal to discuss in detail the so-called Brexit bill as "very disturbing" during a joint press conference with David Davis, his British counterpart, in Brussels.
Mr Barnier said that on the three key issues of citizens rights, Ireland and the financial settlement, not enough progress had been made to progress talks onto trade.
He also doubled down on the EU's demands, vowing to make "no concessions" to protect the interests of the bloc.
However, in a hint that he may loosen the mandate of the EU27 - which currently prevents the talks addressing future trade - he said: "Slowly but surely I will explore ways of getting out of this deadlock."
Unless the EU deems "sufficient progress" to have been made on those three areas, the talks cannot progress onto phase two, which will include discussions on a free trade agreement.
The grim appraisal comes despite positive signals earlier this week from British officials who had suggested that they were close to reaching an agreement on the rights of EU citizens living in the UK, and vice versa.
Net week EU leaders will meet in Brussels on 19 October for a two day summit, where they will decide whether Britain has made “sufficient progress” in the negotiations.
As huge divisions remain over the financial settlement there is little hope of trade talks being given the green light.