Next phase of Brexit talks 'likely delayed' to December - Sky sources

Cabinet ministers involved in the Brexit negotiations are privately indicating that the next phase of talks may not happen until Christmas.

This "sufficient progress" on phase-one negotiations on money, citizens and Ireland (Other OTC: IRLD - news) had been pencilled in for October, but looks increasingly likely to be delayed until December.

It means there will be less than a year for talks on the future trading relationship between the UK and EU, and another two months of the two-year Article 50 timetable being used up.

Sky (Frankfurt: 893517 - news) sources have indicated that the challenge and timing of agreeing a new German government after federal elections at the end of September has meant a "more formal" engagement from Berlin than had been anticipated.

Some in the UK Government anticipate that a possible change in Chancellor Angela Merkel's coalition partner to the liberal Free Democrats will make the Brexit negotiations easier and "more business-like" than the current Grand Coalition.

On current polling, the FDP will re-enter the Bundestag with sufficient MPs (BSE: MPSLTD.BO - news) to replace the centre-left SPD of ex-European Parliament chief and arch-federalist Martin Schulz.

Last month, the FDP's Michael Theurer demanded Germany sets up a Brexit Cabinet "to achieve a fast and successful conclusion to Brexit negotiations" and to prevent a relapse to World Trade Organisation (WTO) terms and tariffs in trade between Germany and the UK.

In Brussels, Commission negotiator Michel Barnier was reported last month to have told EU ambassadors that his recommendation to the European Council of "sufficient progress" on the first phase of talks was "highly unlikely".

That was put down to the refusal of UK negotiators to engage with a formal response to the EU's position paper on financial liabilities, which could yield a so-called exit bill of up to £50bn.

Better progress and more formalised negotiations have taken place on EU citizens' rights.

On Wednesday the UK published its report on the Northern Ireland border . The EU is expected to publish its position paper on Ireland early next month.

Three negotiation sessions are scheduled before the October European Summit. Brussels sources indicated that the August session beginning on bank holiday Monday was likely to be more of a fact-finding session, and that crunch time would be in September and October.

Any delay in approving the next stage of negotiations would also delay the start of talks about a transition arrangement.

A number of businesses have expressed concern that contingency plans for a cliff-edge WTO-terms Brexit will have to be activated if a transition is not agreed by the end of the year.

A Department for Exiting the European Union spokeswoman said: "As the Secretary of State has said, it is important that both sides demonstrate a dynamic and flexible approach to each round of the negotiations.

"Government officials are working at pace and we are confident we will have made sufficient progress by October to advance the talks to the next phase."