Britain's Prime Minister Theresa May arrives at the EU summit meeting in Brussels, Belgium
By Elizabeth Piper and Alastair Macdonald
BRUSSELS (Reuters) - European Union leaders welcomed a proposal by British Prime Minister Theresa May aimed at unblocking Brexit talks, but said concessions to ease the fears of EU citizens living in Britain were not enough.
Arriving at a two-day summit in Brussels on Thursday with other EU leaders, May sought to shift the focus away from a failure to push the talks beyond a discussion of a divorce settlement and onto trade talks just 17 months before Britain is due to leave.
Instead the prime minister, weakened after losing her Conservative Party's majority in a June election, put renewed emphasis on settling citizens rights, one of three issues that must be solved to break the deadlock in talks.
But EU leaders said there was more work to be done, with German Chancellor Angela Merkel describing some "encouraging" signs that could help pave the way for a discussion on future trade ties at the next EU summit in December.
May said the leaders assess the progress that has been made so far in the Brexit talks and set out "ambitious plans" for the weeks ahead.
"I particularly, for example, want to see an urgency in reaching an agreement on citizens' rights," May told reporters.
But she avoided questions about increasing the amount Britain is willing to pay when it leaves, instead referring back to a speech last month in Italy when she outlined an offer of around 20 billion euros ($24 billion).
May will discuss her Brexit strategy over dinner. On Friday morning, once she has left, other EU leaders are expected to say the talks have not yet made enough progress for them to open the trade negotiations.
Weakened after losing her Conservative Party's majority in a June election and failing to rally support at an ill-fated party conference, May is constrained in her ability to address EU demands that she increase her pay offer for the divorce agreement.
Some members of her own party would prefer to see her walk away if the EU does not agree to move the talks forward to discuss trade. Germany and its allies do not want to be left with a large bill when Britain leaves the bloc in March 2019.
Merkel said EU leaders would listen to the report from their chief negotiator Michel Barnier, but that sufficient progress had not yet been made. "We will continue the talks with a view to reaching the second phase in December".
Irish Prime Minister Leo Varadkar urged May to "come up with more clarity" not only on guarantees on citizens rights, but also on her plans to avoid a return of a hard border with Northern Ireland. "These are still difficult issues, but particularly the question of the exit bill," he told reporters.
May tried to shift the focus away from how much Britain should pay.
On her Facebook page, she wrote that "we are in touching distance of agreement" for protecting the rights of around 3 million EU citizens living in Britain and promised to make it as easy as possible for them to stay.
Luxembourg's Prime Minister Xavier Bettel told reporters the Facebook post "went in the right direction" and that "every movement in the right direction is important", noting a change in tone in the British government over the past six months.
But Finland's leader, Juha Sipila, said the EU was "a little bit frustrated about the progress."
The lack of movement has increased the pressure on May from inside her own party.
In an open letter on Thursday, pro-Brexit lawmakers and business people said that unless the deadlock was broken, Britain should signal it is ready to be subject to World Trade Organization (WTO) rules from March 30, 2019, when Brexit takes effect.
Owen Paterson, a lawmaker and former minister from May's Conservative Party, said it looked "inevitable" that the trade relationship between Britain and the EU would end up being governed by WTO rules, meaning no special deal.
"So what we're saying is it would be much better to state that now, give business and all our administrative organisations certainty so they can begin to prepare," he said.
(additional reporting by William James and Estelle Shirbon in London, Philip Blenkinsop and Gabriela Baczynska in Brussels; Editing by Noah Barkin)