The sources blame the “lack of leadership” since the General Election on hindering talks
According to two of May’s most senior ministers, the Government is not prepared to call the EU’s bluff and walk away without a deal.
This is despite one of the ministers putting the odds at “50/50”.
One minister told The Sun: “Since the election, the system has fallen into inertia.
“No proper leadership means departments have stopped preparing for no deal, and they are using our lack of a majority as an excuse.
“It is killing our negotiating hand, as the EU is watching us very carefully and they can see just how little we’re doing too.”
Philip Hammond is being blamed and pro-Remain MPs are demanding that the Chancellor sets aside billions in the Autumn budget to prepare for a hard Brexit.
The Cabinet minister added: “It’s straightforward – Hammond simply has to show the EU the colour of our money in the Budget so they know we’re for real.”
According to experts, pro-Brexit cabinet sources have claimed that the Government’s preparation for a no deal is so inadequate that the UK couldn’t execute it.
Some Tory Eurosceptics suspect that the Government may not be preparing for a no deal Brexit because it means the Government won’t walk away without one.
One Tory Eurosceptic said: “We prepared for the millennium bug, we stockpile vaccines for bird flu and all sorts of epidemics. So, why aren’t we preparing for no deal?”
The calls come amid a stalemate between the UK and the EU over Brexit negotiations.
The EU Parliament recently voted that the UK has not made enough progress in negotiations to begin trade talks.
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France and Germany are refusing a transition deal unless Britain gives more details about the size of the Brexit bill, despite Theresa May offering an £18billion transition bill.
The senior Cabinet Ministers say the EU will not give into the PM’s demands if they do not see the UK is prepared to exit without a deal.
But the Prime Minister is to release more detail about preparation in two new Government white papers.
The papers outline the Government’s plans on new customs and trade systems after Brexit.
The treasury believe that preparing for a no deal would be a waste of tax payers money
They would allow the UK to operate as an “independent trading nation” and would amend the VAT and excise duty regimes so Britain can set its own tariffs and taxes.
Mrs May told MPs: “While I believe it is profoundly in all our interests for the negotiations to succeed, it is also our responsibility as a Government to prepare for every eventuality.
“So that is exactly what we are doing.”
Also, this would include thousands of Border Force staff to process arrivals from the EU and there would need to be new regulators.
Officials also have identified the need to buy more land to build a lorry park at major ports such as Dover.
But Mr Hammond is refusing to offer to spend on “no deal” items, such as a brand new customs system, a computer system to run it and checkpoints at ports.
Smaller states say that Barnier should “move on” in talks
A Treasury spokesman said: “A responsible Government should prepare for all potential outcomes including the unlikely scenario in which no mutually satisfactory agreement can be reached.
“That is exactly what we are doing across the whole of Government.”
The white paper said the inspection from incoming vehicles would take place “inland as much as possible” to stop ports being clogged up.
But the Treasury insists this would be a waste of taxpayers money as a good Brexit deal would mean there is no need to set up any of these new systems.
Denmark Finance minister Kristian Jensen said the negotiations between the UK and the EU were “not rocket science” and insists Brussels’ wrangling over how much money the UK should pay to leave the bloc is nothing more than a game seen in many political negotiations.
A Brussels source told The Sun: “Many smaller states are telling Michel Barnier that he should move on.
“The French and Germans appear to be dug in over no moving forward, but the smaller countries do seem resolute.”