The door is "still ajar" for talks with the EU over a post-Brexit trade deal but only if it moves ground in key areas, Michael Gove has said.
He said the EU must speed up the negotiations and offer better terms.
It comes as the EU's chief negotiator Michel Barnier will not travel to London for talks tomorrow but will join "remotely, as planned", his team said.
Negotiations between the UK and the EU have stalled amid disagreements over fishing access and competition issues.
The EU has said it is prepared to "intensify" talks but it would not agree a deal at "any price".
The CBI and other business organisations urged the UK government to focus on bridging its differences with the EU, saying a deal was vital to help the post-Covid recovery.
They warned that uncertainty about the UK's future trading relationship with its largest market was "chipping away at business resilience" at a time when many firms were being battered by coronavirus.
Downing Street said on Friday that official negotiations over a future economic partnership were "over" and the UK should "get ready" to trade with the EU from 1 January without a specific agreement.
Boris Johnson has accused the EU of resisting the UK's preferred outcome of a deal based on the one the bloc has with Canada.
The prime minister has said the UK should now be prepared for the alternative of a much more limited relationship, based on the EU's existing arrangements with Australia.
However, this would see tariffs applied on goods crossing the channel once the UK leaves the EU's single market at the end of the year, pushing up the cost of imports and exports.
The EU's chief negotiator, Michel Barnier, was due in London for talks with his counterpart, David Frost, on Monday, but the UK said this would be pointless without a fundamental change in direction from the bloc.
Senior EU sources had indicated on Friday that Mr Barnier would be attending in person. But it is now expected that he will hold a video conference call with Lord Frost to discuss the structure of any future talks.
Mr Gove told the BBC's Andrew Marr that the EU "effectively ended the current round of talks" when its 27 leaders met in Brussels on Thursday to take stock of progress and said more was required from the UK.
"It was the case we were making progress but then the EU retreated from that," he said.
"We have drawn the conclusion that unless their approach changes, they are not interested and they have in effect drawn stumps."
Mr Johnson previously indicated that the UK would walk away from the talks unless EU leaders agreed an outline deal at last week's summit in Brussels.
Asked by Andrew Marr whether the UK was engaging in sabre-rattling or the door was still ajar to further discussions, Mr Gove replied: "It is still ajar. We hope the EU will change their position and we are certainly not saying if they do change their position we can't talk to them."
Mr Gove said the UK was preparing for a range of outcomes, including leaving on what he described as "Australian terms", which would see trade between the two partners default to World Trade Organization rules.
"That is not going to be a picnic," he said on this scenario. "The key thing is we are taking the steps alongside business to be ready for that outcome."
And he said he was "not embarrassed" by comments he made during the 2016 EU referendum campaign, when he was a key figure in the Vote Leave campaign, when he claimed that reaching a trade deal would "not be any more complicated or onerous than the day-to-day work" of the UK's diplomats.
He said the remarks, and comments in a March 2019 newspaper interview in which he said the British public did not vote for Brexit in order to leave without a deal, should be placed "in context", given the UK had since negotiated a withdrawal agreement and left the EU.
Businesses have warned that a failure to reach a deal will accentuate the damage done by the Covid pandemic. Trade bodies representing 190,000 firms have written to Mr Gove urging him to reach an agreement.
"With each day that passes, business resilience is chipped away," the CBI and other groups said.
"A swift deal is the single most effective way to support recovery in communities across Europe.
"After four years of debate, there must be a resolution. 2021 can then be a year to rebuild, rather than regret."