BRUSSELS has been warned it will break its own rules about relations with non-EU nations if it refuses to compromise on Brexit, it was reported.

Ministers are said to have pointed out to their European counterparts that the Treaty of Lisbon requires the EU to “establish an area of prosperity and good neighbourliness”.

The warning comes came after the International Trade Secretary Liam Fox said there was now a “60-40” probability of no-deal Brexit due to European Commission “intransigence”.

“We have made an offer that some people think is on the generous side and the EU has to know we are not kidding,” senior Whitehall source told The Daily Telegraph.

“If they don’t like our offer they need to come back and say what the alternative is, but they can’t just keep stalling.

“They also need to accept that we’ve done nothing wrong. We left under the terms of the Lisbon Treaty, which says they have obligations to help us.

“The way they are behaving is making things difficult and if we end up with no deal we will make it clear whose fault it was.”

Article 8 of the treaty also states that the EU's dealings with its neighbours should be "characterised by close and peaceful relations based on cooperation”.

David Davis, the former Brexit secretary, said: “The Lisbon Treaty requires them to come up with a workable arrangement and that’s certainly not the description of their behaviour at the moment.

“It’s certainly not the intention of the EU to have a no-deal Brexit but they are misjudging us at the moment.

“This is a negotiation and it will go to the edge, but we must not panic about this.”