The EU could be ready to drop some of its “red lines” from the Brexit deal it struck with the UK to “help” save it, Chancellor Philip Hammond has said.
He said he did not believe the EU would scrap the backstop – the plan to keep an open border between Northern Ireland and Ireland.
But some in the EU were “looking at what they can do” to change it to get the deal through the UK Parliament.
He also warned of “very significant disruption” from a no-deal Brexit.
The UK is due to leave the EU on 29 March, with or without a deal.
Prime Minister Theresa May is battling to get her plan through Parliament despite the fact it suffered an historic defeat in the Commons last week – losing by 432 votes to 202.
Downing Street said it is continuing conversations with MPs to address a range of concerns about the backstop. The plan aims to keep an open Irish border after Brexit, when it becomes the UK’s only land border with the European Union, by remaining aligned with certain EU rules.
Opponents of the backstop don’t believe assurances that it will be be a temporary measure used as a last resort if no future trade deal is agreed with the EU.
They fear it will effectively trap the UK in the EU indefinitely, with no say over its rules and no ability to strike its own trade deals.
Hard line Brexiteers in the Conservative party and the DUP – whose support Theresa May relies on in Parliament – say they will not back Mrs May’s deal while the backstop remains part of it.
No 10 said they were “not there yet” with a new backstop proposal to take to Brussels.
But they said there was a clear message from the EU that they wanted the UK to leave with a deal and, in order to do so, there will have to be some changes.
Some backbench MPs are trying to make the deal more palatable by removing, replacing or time-limiting the backstop, when Mrs May’s deal returns to Parliament on Tuesday.
Others are trying to force ministers to delay Britain’s departure from the EU for up to a year if MPs can’t agree on a deal by 26 February, to prevent a no deal Brexit.
Mr Hammond said leaving with a withdrawal agreement was the “only credible and sustainable way” forward, and he believed it was his job as chancellor to “drive us towards a compromise deal”.
Speaking to BBC Radio 4’s Today programme from Davos, where he has been meeting EU and business leaders, he claimed some European politicians were “thinking very hard about where the European Union has drawn its red lines [and] whether they really need to be in the place where they have been drawn”.
He added: “What I am hearing from European politicians and commentators is that they do take this issue very seriously, they understand the challenge that we have got at home and generally – not all of them, but many of them – want to help.
“They are not prepared to compromise on the fundamental principles that the EU has set out, but they certainly are looking at whether there is anything they can do without compromising those principles.”
Earlier on the Today programme, French finance minister Bruno Le Maire said it was up to the British government to find a way out of the situation, not EU member states.
He told Today that the backstop issue was “done” and the EU had “nothing to give” on the Brexit deal apart from “clarifications”.
But Mr Hammond said the French had “always been the hardest in this debate” and talking to other European politicians would offer “a more balanced view”.
The deputy leader of the DUP, Nigel Dodds, said he had been “encouraged” by a change in tone from Europe – namely a speech by the EU’s chief negotiator, Michel Barnier, who said on Wednesday that they would “have to find an operational way” of carrying out checks without putting a hard border between Ireland and Northern Ireland.
Mr Dodds called it a “new and more realistic approach” and “a long way from the dramatic language EU spokespeople were using this time last year”.
He added: “We need to see more of this kind of spirit in the negotiations. It is only when the EU comes to the table with a constructive mind-set that there will be real progress towards a mutually beneficial deal.”
Chancellor Philip Hammond also warned that there would be “very significant disruption” for the UK economy if the country left the EU without a deal.
Labour’s shadow chancellor John McDonnell called for Mr Hammond to come off the fence and tell the prime minister to rule out a no deal Brexit.
“As chancellor, he knows how bad a no-deal Brexit would be for the jobs and livelihoods of our people and yet he won’t come out and stand up to Theresa May.
“In interview after interview he avoids the question and passes the buck. He did it again this morning. There’s a word for it. It’s gutless.”