UK Prime Minister Theresa May was scheduled to meet European Commission President Jean-Claude Juncker on Monday for crunchtime talks that could determine whether Brexit negotiations can continue into a second phase.

Brussels has stipulated that "significant progress" must be reached on three key issues - namely the status of the border between Northern Ireland and the Republic of Ireland, citizens' rights, and the Brexit divorce bill - before negotiations on trade and the United Kingdom's future relationship with the European Union can begin.

Last year, the UK voted to leave the EU in a national referendum.

It is thought that the Irish border remains a sticking point, while good progress has been made on the other two issues.

A Brussels diplomat told Reuters there was cautious optimism that negotiations will move forward. The diplomat said much would depend on the outcome of May's talks over lunch.

"I have a good feeling but I am not prejudging the outcome," the diplomat said.

May was scheduled to meet with Juncker and Donald Tusk, the president of the European Council, at midday in Brussels.

The UK Prime Minister's office has said the meeting will be an "important staging post" on the road to a "crucial" summit with representatives of the other 27 EU members, on Dec 14 and 15, when the UK hopes trade talks can commence.

The two sides are understood to have made good progress on establishing the status of the approximately 3 million EU citizens living in the UK and the around 1 million UK citizens living in EU nations. Discussion points will have included whether the European Court of Justice should have jurisdiction over EU nationals in Britain, whether UK citizens should be able to work without restriction in EU nations, and whether EU and UK citizens working in those respective regions can bring their families with them.

Divorce bill

Regarding the Brexit divorce bill, the EU wants assurances that the UK will "honor its commitments" and uphold a financial settlement upon leaving the EU. The two sides are thought to be close to reaching an agreement about the bill, which is thought to be in the region of 50 billion pounds ($67.6 billion).

An agreement on the Irish border is thought to be some way off. It is understood that EU officials and leaders from the Republic of Ireland will require a commitment from May that the dividing line will not become a "hard border".

Simon Coveney, Ireland's foreign minister, said on Sunday Ireland had "no desire" to hinder the progress of negotiations but noted that the country wants a concrete proposal about how the UK plans to establish a border without customs and people-checks.

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