The summit continues Thursday with an agenda limited to some issues both sides firmly agree on, including fighting cybercrime and dealing with an assertive Russian Federation.
Although the EU-UK talks collapsed on Sunday (14 October), Prime Minister Theresa May will probably find out that brokering a final withdrawal deal with the bloc will actually be easier than successfully piloting it through the UK Parliament.
And the suggestion that Britain could stay firmly in the EU's sphere for longer than the 21 months expected has fired up those who already say Britain has already given up too much in the negotiations.
"This is a play to normalise "transition" indefinitely until a time when the establishment can call the whole thing off".
British Prime Minister Theresa May had earlier addressed her fellow leaders, indicating that she could accept extending the post-Brexit transition phase to take the heat out the deadlocked issue of the Irish border.
Jeremy Corbyn noted Mrs May had not mentioned "Chequers" in her recent update to the Commons and in her Conservative Party conference speech, and asked: "Does this mean the Chequers plan is now dead?"
In other issues, a draft communique of the summit, seen by Reuters news agency, was expected to detail European Union members' "joint commitment to open, free and non-discriminatory trade" and "to fight all forms of protectionism".
This week's Brussels summit had been set as the deadline for a draft deal, but European Union leaders have instead been left to contemplate the potentially catastrophic scenario of Britain crashing out in March without any agreement. "For now, we have a no-deal", said a senior European Union diplomat, adding leaders were waiting for Britain's budget due to be presented to parliament in late October to be passed.
Today, Mrs May will have further bilateral meetings, having had talks on Wednesday with Jean-Claude Juncker, the European Commission President, Donald Tusk, the European Council President, Leo Varadkar, the Irish Taoiseach, and Emmanuel Macron, the French President.
The proposed 12-month extension would cost billions of pounds in EU fees and leave Britain under European rules for nearly six years after the referendum result.
"My working assumption is not that we will have a no-deal, a no-deal would be risky for Britain and the European Union".
TRT World's Simon McGregor-Wood reports from Brussels.
Economist Intelligence Unit analyst Danielle Haralambous said any transition extension would be a "hard sell" to "increasingly restless" Brexiteers.
A dog wears a banner during the "Wooferendum march" in central London where dog owners and their pets gather to demand a new Brexit referendum. "By working intensively and closely we can achieve that deal", she told reporters.
Chancellor Angela Merkel's spokesman said that members also discussed cybersecurity, migration, and the continued development of the Eurozone.
Juri Ratas, the Estonian Prime Minister, struck a more sympathetic tone.
The EU's proposed backstop, which would see just Northern Ireland remain aligned with Brussels' rules, has been branded as unacceptable by Mrs May and rejected outright by the DUP. Others fear May is leading the country into a no-deal Brexit, when Britain leaves the bloc without a deal. Brexit must be orderly for everyone and for all the issues, including on the island of Ireland.
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