Britain and EU fail to reach Brexit deal despite 'significant progress'

Negotiators had earlier appeared close to reaching an agreement on the Irish border, the complex and historically sensitive issue that had emerged as a final stumbling block.

But after talks over lunch, British Prime Minister Theresa May and EU Commission President Jean-Claude Juncker said some issues remained unresolved. Both said they were confident of an eventual deal soon that would allow talks to progress to a future trading relationship.

Juncker said that despite "significant progress" made in recent days, "it was not possible to reach a complete agreement today."

May said meetings had been "constructive" but differences remained on a "couple of issues." May said she remained confident an agreement could be reached in the coming days.

The EU has stuck firmly to three demands: that Britain pay a substantial "divorce bill," that rights of European citizens in the UK are guaranteed, and that there is no reinstatement of a border infrastructure between Northern Ireland, which will leave the EU with the rest of Britain in March 2019, and the Republic of Ireland.

Substantial progress on the first two issues was made last week but wrangling on the Irish border continued through Sunday night and into Monday.

The dismantling of a so-called "hard border" was a key plank of the Good Friday Agreement, which brought peace to Northern Ireland after years of sectarian conflict. The Irish government was determined to secure a cast-iron guarantee from the UK that there would be no return to border controls after Brexit.

Britain has been desperate to reach a deal on the outstanding issues to secure an agreement from the EU that it would move on to discussions about a future trading relationship.

It had appeared earlier on Monday that a deal on the Irish border was close.

Philippe Lamberts, leader of the Greens in the European Parliament, told CNN that he had seen draft text of an agreement in which the UK had agreed that Northern Ireland would continue to be aligned with EU laws and regulations that would otherwise require checks at the border.

When asked what was outlined with regard to Northern Ireland, Lamberts said that "it is what is needed."

"We needed a commitment to have no divergence. (The UK) didn't want that wording but what we have, it is full alignment."

Lamberts went on to say he was surprised the UK had agreed, adding that while some may see Monday's developments as "concessions" he called the move coming "to terms with what is needed."

'Critical moment' in talks

The developments came during a fast-moving day in Brussels. Donald Tusk, President of the European Council, scrapped a scheduled trip to Israel, citing a "critical moment" in Brexit negotiations. An EU official said the trip was abandoned so that Tusk can be available for "consultations on draft guidelines" for potential trade discussions.

Tusk said in a tweet that he was "encouraged" on the issue of Ireland and "closer to sufficient progress" following a phone call with the Irish Taoiseach, Leo Varadkar.

"Tell me why I like Mondays! Encouraged after my phone call with Taoiseach @campaignforleo on progress on #Brexit issue of Ireland. Getting closer to sufficient progress at December #EUCO."

Varadkar was due to make a statement later on Monday afternoon.

"These discussions are in a sensitive place right now," Irish Deputy Prime Minister Simon Coveney told RTE Radio 1 earlier on Monday. "Both governments understand what each other is asking for, and obviously there's consultation going on with both governments to try and get that right."

The UK hopes that the EU will deem sufficient progress to have been made in order to give the go ahead for negotiations to move on to a second phase of negotiations at a summit next week. This phase would focus on a future trade relationship between the UK and EU and transitional arrangements.

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Repercussions in UK

For a deal on the Irish border to stick, May will need the support of the Democratic Unionist Party (DUP), the hardline Northern Ireland party whose 10 Westminster lawmakers are propping up her minority government.  

DUP leader Arlene Foster said her party "have been very clear" and "will not accept any form of regulatory divergence which separates Northern Ireland economically or politically from the rest of the United Kingdom."

Even if the DUP came on board with the deal, there could be other consequences for May. The suggestion that Northern Ireland would enjoy a special status withing the UK has infuriated leading figures in areas of the UK that voted to remain in the European Union in the 2016 Brexit referendum.

Nicola Sturgeon, the First Minister of Scotland, wrote on Twitter: "If one part of the UK can retain regulatory alignment with EU and effectively stay in the single market (which is the right solution for Northern Ireland) there is surely no good practical reason why others can't."

Mayor of London Sadiq Khan said there were "huge ramifications" for the city if news of the deal turned out to be accurate.

He said on Twitter: "Londoners overwhelmingly voted to remain in the EU and a similar deal here could protect tens of thousands of jobs."

CNN's Hilary McGann, Bianca Nobilo, Carol Jordan and Matt Wells contributed to this report from London.

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