Donald Tusk has said Brussels is not working on a "no deal" option - but indicated that it could be open to suggestions if sufficient progress still hasn't been made by the end of the year.
In response to the UK government's move to set out its plans for a "no deal" option, the European Council President said the EU was hopeful it could move to the second stage of talks - which will allow negotiators to talk trade and transition - before the critical end-of-year deadline.
“We hear from London that the UK government is preparing for a ”no deal“ scenario. I would like to say very clearly that the EU is not working on such a scenario,” Tusk said in a speech in Brussels.
“We are negotiating in good faith, and we still hope that the so-called "sufficient progress" will be possible by December. However, if it turns out that the talks continue at a slow pace, and that "sufficient progress" hasn't been reached, then - together with our UK friends - we will have to think about where we are heading.”
Until now, the bloc has remained resolute that sufficient progress has not yet been made, although there has been a softening of rhetoric on both sides since Theresa May's Florence speech.
The EU's chief negotiator Michel Barnier backed up Tusk's optimism this afternoon, saying the team had been having "constructive talks".
However, in response to May's statement that the ball is now in the EU's court, he said: "Brexit is not a game."
Many firms have warned that if the deadlock is not broken before December, they will trigger their Brexit contingency plans, which could cause huge upheaval in the UK and Europe.
Tusk used the same speech to describe the referendum result as "negative", saying the campaign was "full of false arguments and unacceptable generalisations".
"But it would have been a big mistake to interpret the negative result exclusively as a symptom of British exceptionalism and Euroscepticism, because all over Europe, even moderate voters were asking "Is the European Union the answer to problems of instability and insecurity, or is it now standing in the way?"," he added.