Angela Merkel has said there are “encouraging” signs of progress in Brexit negotiations and suggested trade talks could begin in December.
The German chancellor was speaking as leaders gathered for a crunch EU summit where they are expected to call on the UK to do more to end the deadlock.
Theresa May has called for “urgency” from the EU in settling the issue of citizens’ rights after Brexit.
The UK wants the negotiations’ agenda to move on to a future trade deal.
But this requires approval from the EU 27 leaders that enough progress has been made in the first phase.
Ms Merkel said the progress so far was “not sufficient to enter the second phase”, adding: “But it is encouraging. We will continue the talks with a view to reaching the second phase in December.”
Mrs May will address EU leaders at the summit later.
At a meeting on Friday, at which the UK will not be present, the 27 leaders are expected to conclude officially that “insufficient progress” has been made on the first topics for discussion to move onto the second phase of trade discussions.
Mrs May spoke of her desire for a future partnership with the EU as she arrived in Brussels.
“At the heart of that remains cooperation on the key issues and dealing with the shared challenges that we face,” she said.
She added: “We’ll also be looking at the concrete progress that has been made in our exit negotiations and setting out ambitious plans for the weeks ahead. I particularly, for example, want to see an urgency in reaching an agreement on citizens’ rights.”
European Council President Donald Tusk has said there will be no “breakthrough” at the two-day summit, but progress could be achieved by the next scheduled meeting of EU leaders in December.
As well as citizens’ rights, agreement has yet to be reached on the UK’s financial obligations to the EU and the border in Northern Ireland.
