ANGELA Merkel has lifted the UK Government’s mood at the two-day EU summit by saying there were "encouraging" signs that talks on the future UK/EU trade relationship could begin in December.

However, the positive remark by the German Chancellor was tempered by Donald Tusk, the European Council President, who suggested this was dependent on "more concrete proposals from the British side".

These words reflected pressure from Brussels for further UK concessions on the so-called "divorce bill". Britain has suggested an opening offer of £20 billion; described as “peanuts” by Antonio Tajani, the European Parliament President, who said a figure of around £50bn was more realistic.

At the summit, Mr Tajani said: “Progress so far has not been satisfactory. We heard the tone of the [Florence]speech by Mrs May but I am still waiting to see the tone of that speech - the more flexible approach - transformed into practical deeds."

Mark Rutte, the Dutch premier, echoed the point, making clear the Prime Minister had failed to provide the “clarity” European leaders wanted on Britain's financial settlement in her speech in Italy last month, when she said the UK would honour commitments made as an EU member.

Brussels believes such commitments include paying the pensions of former EU staff, which, it is thought, alone could be around £7 billion, as well as funding on-going infrastructure commitments, adding many billions of pounds more.

Arriving at the summit, the PM, who addressed the subject of Brexit over a working dinner last night, made clear she was no longer expecting a breakthrough this week, characterising the summit as simply an opportunity to "take stock" of progress so far.

But Mrs May said she would be setting out "ambitious plans" for further negotiations in the weeks ahead, stressing that she wanted to inject a new "urgency" into discussions on the post-Brexit rights of EU citizens living in the UK and Britons on the continent. Ahead of the summit, she announced a new “streamlined” system to speed up the registration of EU nationals living in Britain.

The PM was seen deep in conversation with Mrs Merkel and Emmanuel Macron, the French President, who will be key to pushing the talks into the second phase on transition and trade.

The German Chancellor said she believed enough progress had been made to encourage her to think it would be possible to "take the work forward and then reach the start of the second phase in December".

Mr Macron noted how there had been attempts to create divisions within the EU but that the 27 would show "very strong unity in the discussions on Brexit" with shared goals and support for Michel Barnier in his role as the EU's sole chief negotiator.

Other EU leaders indicated they were hopeful of a breakthrough at the European Council on December 14/15.

Juha Sipila, the Finnish premier, said: "I hope we can decide the next phase in December's meeting, but today we are not in that position." He added he was "not yet" preparing for the possibility of Britain leaving the EU without a deal.

On Friday morning, the EU27 will have a private meeting minus the UK to discuss Brexit. It is expected that while they will say insufficient progress has been made, they will confirm that they will begin among themselves to prepare the ground for entering the trade and transition phase.

Meanwhile, Jeremy Corbyn was also in Brussels meeting Socialist MEPs and having a private bilateral with Mr Barnier, which he said was aimed at helping to “unblock the Brexit logjam”.

Eyebrows have been raised at the timing of the EU chief negotiators’ talks. The SNP MEP Alyn Smith noted: “Mr Barnier is a hard-nosed professional operator. He knows how to get results. This meeting is not happening by accident.”

After the meeting, the Labour leader said: “It’s not good enough that all this time after the referendum the Government is still not able to tell us what the position is or what the outcome is going to be.”