European Union leader optimistic of breakthrough in Brexit talks

Prime Minister of Ireland Varadkar and Deputy Prime Minister Coveney attend a press conference at Government buildings in Dublin

It appeared that the DUP's refusal to accept compromise language on the future of Irish border, under which the United Kingdom would commit to "continued regulatory alignment" to ensure a hard border would not return, was a hurdle too far.

"We can not align the regulation of one part of the United Kingdom with the European Union", he said.

"It was not possible to reach complete agreement today", he said.

May and Juncker made no comment to reporters when they met at the European Union executive's Berlaymont headquarters for a lunch that diplomats and officials hope can seal a breakthrough that would open the way to negotiations on future trade relations.

"I am surprised and disappointed that the British government now appears not to be in a position to conclude what was agreed earlier today", Varadkar said at a press conference in Dublin.

David McAllister, a vice-president of the European People's Party - the European Parliament's largest grouping - said it was "difficult to predict" whether EU leaders will sanction the start of second phase Brexit talks this month, also classing the prospects of progress at "50/50".

Britain and the European Union failed to strike a Brexit divorce deal during talks in Brussels on Monday but said they were "confident" of reaching an accord later this week. The lack of progress so far has raised concerns that Britain may not have a deal by the time it officially leaves on March 29, 2019.

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There was even talk of Mrs May's set-piece lunch with Jean-Claude Juncker, the European Commission President, being used to thrash out the terms of a trade deal, with the terms of the divorce deal already in the bag.

She said: "There are a couple of issues, some differences do remain which require further negotiation and consultation".

Prior to May's Brussels trip, expectations were high for breakthroughs on three major Brexit issues, namely the divorce bill, Irish border and citizen's rights.

Meanwhile, Sinn Fein's Brexit spokesman David Cullinane told Sky News it is "crucial" Northern Ireland remains in the customs union and single market as "the only way to avoid the hardening of the border".

The Prime Minister is reliant on any support from the party as the DUP is propping up her government with its 10 MPs.

He added: "The indications we have is that we are in a much better place now than we have been in the negotiations to date. Getting closer to sufficient progress at December #EUCO".

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