Theresa May has said she is "ambitious and positive" for Britain's negotiations with the EU but there was still "some way to go" in the talks.

The Prime Minister was speaking after leaders of the remaining 27 EU member states gave the green light for preparations to begin for the second phase of Brexit talks, dealing with trade.

The move paves the way for the possible start of formal talks on the future EU/UK trade relationship in December.

The European Council in Brussels decided that insufficient progress had so far been made in divorce talks to move on to trade discussions now, as Britain had hoped.

Formal discussions with the UK will continue to focus on the "divorce" issues of citizens' rights, the Irish border and Britain's financial settlement.

But Council president Donald Tusk said in a tweet: "Brexit conclusions adopted. Leaders green-light internal EU27 preparations for 2nd phase."

At a press conference after her participation in the summit concluded – and while the remaining 27 leaders continued their discussions – Ms May said: "I am ambitious and positive for Britain's future and for these negotiations.

"But I know we still have some way to go. Both sides have approached these talks with professionalism and a constructive spirit and we should recognise what has been achieved to date."

The agreement among the 27 leaders to begin preparatory work on trade talks means scoping discussions are now expected to begin in Brussels in time for the next scheduled Council summit on December 14-15.

Until then, formal discussions with the UK will continue to focus on the "divorce" issues of citizens' rights, the Irish border and Britain's financial settlement.
EU leaders made clear this morning that they are looking for more clarity from the UK about the size of its divorce bill before giving the go-ahead for trade talks to get under way.

But Ms May repeatedly dodged attempts by reporters to get her to reveal the sum she was prepared to hand over to Brussels, insisting that the financial settlement could only be finalised as part of the overall Brexit deal.

She said officials were going through the issues "line by line" to decide what was owed and added: "The full and final settlement will come as part of the final agreement that we are getting in relation to the future partnership and I think that's absolutely right, I think that can only be done in that particular context."

Malta's Prime Minister Joseph Muscat said Ms May's address was a constructive one but no significant progress on Brexit was reported.

Earlier, German Chancellor Angela Merkel gave an upbeat assessment of the talks, saying they were making progress "step by step".

"I have no doubt that if we are all in clear minds ... We are going to achieve a good outcome," she said. "As far as I am concerned, I don't hear any reason to believe that we are not going to be successful."

Anti-Brexit protesters in London. Photo: Reuters

Ms Merkel said she was "highly motivated" to work on a new mandate for chief Brexit negotiator Michel Barnier which might permit trade talks to begin in December, but warned that the second stage of talks would be "more complicated than the first".

On the divorce issues dealt with in the first stage, there was "by and large general agreement" on the future status of the Irish border and "headway" was being made on expats' rights after Brexit, but Mrs May made no specific new offer on Britain's financial settlement, she said.

Dutch Prime Minister Mark Rutte said the EU27 need "more meat on the bone" of Britain's exit payment, following Ms May's promise in a speech in Florence last month that the UK would honour financial commitments made as an EU member.
The offer made by Ms May in Italy is believed to amount to around €20 billion, while Brussels is understood to be seeking something closer to €60 billion.

Ms May said the two sides were within "touching distance" on a deal regarding citizens' rights.