The head of the European Union's executive on Wednesday reported "genuine progress" in Brexit talks but said the risk of Britain leaving the EU without a deal on December 31st remained.
This was an outcome the bloc was prepared for, European Commission president Ursula von der Leyen said.
Britain and the EU are in a last-ditch effort to agree terms to keep trade flowing without tariffs or quotas from the start of 2021, after London's current standstill transition out of the 27-nation bloc ends.
"The next days are going to be decisive," Ms von der Leyen told the European Parliament. "The European Union is well prepared for a no-deal-scenario, but of course we prefer to have an agreement."
"With very little time ahead of us, we will do all in our power to reach an agreement. We are ready to be creative. But we are not ready to put into question the integrity of our single market," she said.
Negotiators have agreed the outline of a new partnership treaty on goods and services, as well as on transport, she said.
The three main obstacles to a deal are sharing out fishing quotas and agreeing access to waters; finding ways to settle future disputes; and ensuring economic fair play for companies, including on state aid.
"We need to establish robust mechanisms, ensuring that competition is – and remains – free and fair over time. In the discussions about state aid, we still have serious issues, for instance when it comes to enforcement," Ms von der Leyen said.
Ms von der Leyen, a German conservative, said the EU needed to be able to retaliate on trade if Britain undercuts labour or environmental standards in the future and that the bloc wanted long-term predictability for its fishing industry, which faces a reduced catch after Brexit.