The Brexit Secretary is a supporter of Tory leadership favourite Boris Johnson who has made a "do or die" commitment to leave the EU on October 31 with or without an agreement.
He said he had explained to European Union Brexit negotiator Michel Barnier that the Withdrawal Agreement negotiated under Theresa May would not make it through the Commons.
Reports from Brussels suggested Mr Barclay told Mr Barnier that the deal was dead five times during a confrontational meeting earlier this month.
But Mr Barclay told MPs from the Exiting the European Union Select Committee, led by Leeds Central MP Hilary Benn, that there had been "misleading information" about the meeting - although he did set out that the Withdrawal Agreement stood no chance of making it through Parliament in its current form.
"In terms of the Withdrawal Agreement, what I said was that the House had rejected it three times, including the third time by a significant margin; that the European election results in my view had further hardened attitudes across the House and that the text, unchanged, I did not envisage going through the House.
"I don't think that was a particularly controversial observation."
Both Mr Johnson and Jeremy Hunt have said the backstop measures designed as a contingency to prevent a hard border with Ireland would need to be dropped.
With Brussels unwilling to reopen the deal thrashed out with Mrs May, the prospect of a no-deal Brexit in October has increased.
Mr Barclay, who last week appeared at the Great Yorkshire Show in Harrogate as part of a trip to Yorkshire, acknowledged "a no-deal Brexit would be disruptive ... But a no Brexit is the worst of those two outcomes".
Following warnings from the National Farmers' Union that a no-deal exit from the EU would result in shepherds being forced to slaughter their flocks because there would be no market for their meat, Mr Barclay acknowledged the problems that would face the industry.
He said the sheep meat industry was an "outlier" because 97% of exports go to the EU, but the Government was working on intervention measures and compensation.
Asked if there would also be compensation for the car industry if it faced 10% tariffs for exports to the EU in a no-deal situation, Mr Barclay said: "We are having extensive discussions with the industry, including the Prime Minister this week, because it is more nuanced."
He said the Government would "need to look at what the implications are in terms of trade flow across the borders" and what the situation is at the English Channel crossings, which are vital for supply chains.
Mr Barclay added: "Of course there will be impact, but the future trend is into areas such as electric vehicles and there's a huge amount the Government can do in those areas, it's not just what we have got in terms of the status quo."
The Society of Motor Manufacturers and Traders believes that no-deal is "not an option", but Mr Barclay said that was factually incorrect because it remained the legal default.
He acknowledged it was "undesirable" and "disruptive", adding: "Are there mitigations the Government can take? Yes. Do I sit here saying that will be a panacea to all issues? No."