European Commission President Jean-Claude Juncker says "this is not a failure ... I am very confident that we will reach an agreement in the course of this week."

European Commission President Jean-Claude Juncker (R) greets British Prime Minister Theresa May prior to a meeting at EU headquarters in Brussels on Monday, December 4, 2017. May and Juncker will hold a power lunch on Monday, seeking a breakthrough in the Brexit negotiations ahead of a key EU summit the week after.
European Commission President Jean-Claude Juncker (R) greets British Prime Minister Theresa May prior to a meeting at EU headquarters in Brussels on Monday, December 4, 2017. May and Juncker will hold a power lunch on Monday, seeking a breakthrough in the Brexit negotiations ahead of a key EU summit the week after. (AP)

Britain and the EU failed to strike a much-anticipated Brexit divorce deal during talks in Brussels on Monday but said they were "confident" of reaching an accord later this week.

British Prime Minister Theresa May and European Commission President Jean-Claude Juncker fell short of a breakthrough, despite encouraging progress on the thorny issue of the Irish border.

The EU says Britain must make sufficient progress on key divorce issues – Ireland, Britain's financial bill for leaving the bloc, and the rights of EU nationals in Britain – to allow the opening of trade and transition talks at a summit on December 15.

"Despite our best efforts and the significant progress we and our teams have made in the past days on the remaining withdrawal issues, it was not possible to reach a complete agreement today," Juncker said at a joint news conference with May.

"This is not a failure ... I am very confident that we will reach an agreement in the course of this week."

Juncker, a former Luxembourg prime minister, said May was a "tough negotiator and not an easy one."

May said differences remained on a "couple of issues".

"But we will reconvene before the end of the week, and I am also confident we will conclude this positively," May said.

TRT World's Simon McGregor-Wood reports

Getting closer

The failure of the talks came despite EU president Donald Tusk saying just hours earlier that negotiators were "getting closer to sufficient progress" at the December summit, and that he was "encouraged" by a phone call with Irish Prime Minister Leo Varadkar.

Irish broadcaster RTE said Britain was ready to keep the EU customs and single market rules for Northern Ireland in order to meet Dublin's insistence that Brexit should not bring back a "hard border" and threaten a peace process that ended decades of sectarian tensions.

Dublin's demands on the status of the border with British-ruled Northern Ireland have been the key stumbling block recently, with fears that the talks could even collapse amid tensions between the two neighbours.

But an angry reaction from the Northern Irish unionists who prop up May's minority Conservative government meant there was still no deal three hours later, and the meeting was put on hold while May made calls to try to win them over.

"We will not accept any form of regulatory divergence which separates Northern Ireland economically or politically from the rest of the United Kingdom," Democratic Unionist Party leader Arlene Foster said in a statement.

Wanting an Ireland-like deal

Scotland, Wales and London should all benefit from any special deal given to Northern Ireland to smooth access to EU markets after Brexit, the three regions' most senior politicians said on Monday.

Most Scots and Londoners voted to stay in the EU in June 2016's referendum, unlike their compatriots in the rest of the United Kingdom.

Politicians in Scotland, Wales and the British capital have campaigned for Britain as a whole to stay in the EU's single market to smooth trade relations. But Prime Minister Theresa May has ruled that out so far, saying Britain needed the freedom to make its own rules and trade deals.

They rallied to the cause again after Irish government sources said on Monday that the British government had agreed to maintain EU "regulatory alignment" for Northern Ireland, which is part of the UK but shares a land border with the Republic of Ireland, an EU member state.

Keeping regulations in Northern Ireland similar to those in the rest of the EU make it less likely that the bloc would insist on border checks after Brexit.

But making an exception of Northern Ireland may make it difficult for May to argue others cannot have the same. So far, she has argued that Brexit should follow a one-size-fits-all pattern for the whole of the United Kingdom.

"If one part of the United Kingdom can retain regulatory alignment with the European Union and effectively stay in the single market ... there is surely no good practical reason why others can't," Nicola Sturgeon, the head of Scotland's devolved pro-independence government, said on Twitter.

Scotland, one of the United Kingdom's four nations with around five million people, voted by a large majority to keep EU membership, as did Northern Ireland. Wales and England, the most populous nation, voted to leave, straining the structure of the UK and complicating negotiations to unwind four decades of political and trading links with the EU.

"Huge ramifications for London if Theresa May has conceded that it's possible for part of the UK to remain within the single market and customs union after Brexit," Sadiq Khan, London's mayor, said on Twitter.

Britain's capital – which has a population of 8.8 million – voted by a margin of 59.9 percent to remain within the EU. Turnout was high by local standards at nearly 70 percent and Khan, from Britain's main opposition Labour Party, campaigned to stay in the EU.

Welsh first minister Carwyn Jones called for Wales to be allowed to continue to participate in the single market if other parts of the UK could.

May's government has up to now far ruled out any special deal for Scotland, although the Scottish government published a year ago a plan for the northernmost part of the UK to remain in the single market even if Britain as a whole leave. Its plan was, however, rejected as unworkable by the UK government.

Source: TRTWorld and agencies