EU wants more Brexit concessions from UK
EU leaders have made clear to Theresa May that she must make more concessions on Britain's Brexit divorce payment in order to unlock talks on a future trading relationship.
And French President Emmanuel Macron suggested that the bill could top 40 billion euros (£36 billion), saying that earlier indications that the UK could offer around 20 billion euros (£18 billion) to ensure its EU partners were not left out of pocket due to Brexit did not go halfway to what was required.
The Prime Minister repeatedly dodged questions at the European Council summit in Brussels over how much the UK is ready to pay, insisting that the size of a "full and final settlement" will not emerge until agreement is reached on all aspects of Brexit.
But she did not deny suggestions that it could be "many more billions" than the 20 billion euros indicated in her speech in Florence last month.
Mrs May said UK officials will spend the coming weeks going through Britain's financial commitments to the EU "line by line", ahead of a pre-Christmas summit when it is hoped leaders of the 27 remaining EU states will finally give the green light to the second phase of Brexit talks.
The EU27 took just 90 seconds to approve a programme of internal work on their position on trade in preparation for possible talks.
But they made clear that this step will depend on further progress being made on divorce issues including expats' rights, the Irish border and, in particular, the financial settlement.
In their formal conclusions, the EU27 said they aimed to move to the second phase "as soon as possible" and would reassess the state of progress at the next summit on December 14-15. But they noted that Britain has so far made no "firm and concrete commitment" to settle all of its obligations.
Mr Macron said that "much work needs to be done".
"I would say we are far from having reached the necessary financial commitments before we can open phase two," he said. "We are not halfway there."
German Chancellor Angela Merkel said that a breakthrough in December "depends to a large extent" on the UK, adding: "The topic of financial commitments is the dominating issue in that regard."
Irish Taoiseach Leo Varadkar said detail on the UK bill had to be worked out.
"There wasn't anything new on the financial solution. That's still ongoing," he said. "Prime Minister May has indicated that no European state should have to pay more or receive less than would have been the case had they not been leaving, that they would honour their existing commitments."
Asked whether she would deliver further details on the divorce bill in time in order to secure progress in two months' time, Mrs May said: "What we are doing as we look across the weeks coming up to the December Council is looking at a range of issues ... On the financial issue, we will be going line by line through those commitments.”
"I'm positive and optimistic about where we can get to in relation to the future partnership that we want with the EU, because it is not only in the interests of the British people, it is in the interests of people across the remaining 27 members of the EU as well."
She indicated that Britain will be ready to pay "relevant costs" of continued participation in EU projects in areas like science, research and criminal justice, but made clear that an overall figure cannot be expected before the shape of the final deal is known - something that is not expected before autumn 2018.
"The full and final settlement will come as part of the final agreement that we are getting in relation to the future partnership and I think that's absolutely right, I think that can only be done in that particular context," said Mrs May.
As expected, the EU27 backed chief Brexit negotiator Michel Barnier's assessment that insufficient progress has been made in divorce talks for trade discussions to start now, as Britain had hoped.
But the agreement to begin scoping work on trade may reassure City firms which had suggested they might have to move functions and staff to the continent if no progress was made by Christmas. And it is likely to relieve pressure from Tory Eurosceptics on Mrs May to walk away from talks and opt for a no-deal Brexit under World Trade Organisation rules.
Mr Macron said the Prime Minister did not mention the possibility of a no-deal outcome when she addressed EU leaders over dinner on Thursday evening. He suggested the idea could be "bluffing" by "secondary players".
"The problem for Mrs May is that those who pleaded in favour of Brexit never explained to the British people what the consequences would be," said the French president.
Mrs May acknowledged there was still "some way to go" in divorce talks, but said the two sides were "within touching distance" of a deal over the rights of EU nationals in the UK and Britons living on the Continent.
In a possible sign that Britain is responding to EU concerns about the resettlement rights of expats' family members, the PM said: "Whatever happens, we want them and their families to stay."
European Council president Donald Tusk said "reports of the deadlock between the EU and the UK have been exaggerated" and that he wanted to be a "positive motivator" to clearing up remaining issues over the next five or six weeks.
"While progress has not been sufficient, it doesn't mean there has been no progress at all," he said. "The negotiations go on and we will continue to approach them positively and constructively. I hope that we will be able to move to the second phase of our talks in December."
Senior Tory Brexiteer Bernard Jenkin warned the Prime Minister she should not sign up to a deal at any price.
"The cost of paying tariffs on our exports to the EU would be less than half our annual net contribution.
"It is cheaper to pay for access to the single market by paying the tariffs than for us to be continuing to pay our subscription as a member of the EU," he told BBC News.
"We are pulling out halfway through a budget process.
"It is only reasonable that we should consider helping the EU out as we leave the EU and withdraw our contributions but if this becomes much more expensive than envisaged it is simply not worth it."