UK pleads for Brexit transition period, EU unlikely to be moved

The UK was hoping that talks advance enough so that "sufficient progress" is reached on key issues by next week's EU summit. Talks can then begin on trade and future relations.

"October was pretty optimistic to start with, we have not arrived to this intermediate stage yet," said one EU official on condition of anonymity.

Last month, UK prime minister Theresa May proposed "around" a two-year transition period after the UK leaves the EU in March 2019.

That requires a change in the negotiating mandate of the EU's Brexit negotiator, Michel Barnier, which could be done by EU leaders.

However, it is unlikely that this will happen.

"I would be surprised if there is enough ground for us to change the mandate," the official added.

Barnier will update EU ambassadors on Friday, and EU affairs ministers on Tuesday.

The EU official said Barnier will brief the member states on the state of play of the talks, but added that he will not propose a change to his mandate.

The official did not want to speculate on whether Barnier would urge member states to give encouraging signs to the UK on the prospect of a transition period.

Hammond urged the EU to change the sequencing on the negotiations.

EU negotiators say the timeline for the talks is based on the Article 50 of the EU treaty, dealing with exits from the bloc, but sequencing has always been a thorn in the UK's side.

"The proposal that we have put to the EU calls for a rapid response, and it means breaking out of the structure of the negotiation that has been imposed by the European Commission," Hammond said on Wednesday.

He also said talks on the future relationship should start as soon as possible.

"Astonishingly, the most important question, which is what is our long-term relationship with the European Union going to look like, has not yet even begun to be discussed ... We have made the running in this and we really need our European Union partners to engage. It's quite a small ask really," he told MPs.

"Let's sit down around a table and have a chat. That's all we are saying," he added.

Next week, EU leaders will discuss the progress in Brexit talks, but will not give the green light for trade talks.

That might happen at December's EU summit, but European Council chief Donald Tusk warned on Tuesday that the EU and the UK will have to discuss where talks are headed - if sufficient progress has still not been reached on key issues by the December.

Tusk added, however, that the EU is not preparing for a scenario where the UK leaves without a deal - crashing out of the bloc in 2019.

Hammond on Wednesday confirmed that the UK is preparing for such a no-deal scenario, but said he would not commit funds to prepare for now.

"I am clear that we have to be prepared for a no-deal scenario unless and until we have clear evidence that that is not where we will end up. What I am not proposing to do is to allocate funds to departments in advance of the need to spend," he said.

The fifth round of talks ends on Thursday among EU and UK negotiators. No breakthrough is expected.