EU Council President Donald Tusk opened a summit in Salzburg with a stark warning that Britain's position on key issues must be 'reworked'.
Salzburg: British Prime Minister Theresa May clashed with EU leaders on Wednesday over who should make the next move to break the Brexit logjam, as time runs out to get a deal.
EU Council President Donald Tusk opened a crucial summit in the Austrian city of Salzburg with a stark warning that Britain's position on key issues must be "reworked".
He said negotiations on Britain's withdrawal from the European Union, due to take place in March, were reaching a "decisive phase" but said the outcome still remained open.
While welcoming the "positive evolution" of Britain's position on security ties, Tusk said that on the Irish border and post-Brexit trading relations, "the UK's proposals will need to be reworked and further negotiated".
Austrian Chancellor Sebastian Kurz, who hosted the Salzburg summit, added that the EU was "ready to compromise but we also expect that from the UK", calling for May to offer a "step forward".
But May said that after she presented her so-called Chequers plan on post-Brexit trade ties this summer, Brussels must also give ground.
"If we are going to achieve a successful conclusion then, just as the UK has evolved its position, the EU will need to evolve its position too," she said.
She told fellow leaders over a summit dinner Wednesday that "we will of course not agree on every detail", but "the onus is now on all of us to get this deal done".
She warned however against waiting for a change in heart in London, again rejecting calls in Britain for a re-run of the 2016 vote on EU membership.
"The UK will leave on March 29 next year," she said, according to officials.
EU leaders will meet without May for lunch on Thursday in Salzburg to discuss Brexit.
Officials on both sides of the Channel hope this summit will give new impetus to divorce negotiations ahead of a crunch summit in Brussels on October 18.
That was originally viewed as the deadline for a deal, but Tusk is planning a last-gasp gathering in mid-November.
A key sticking point in the talks is how to avoid a "hard border" between British-ruled Northern Ireland and the Irish Republic when London leaves the EU single market and customs union.
There are fears that frontier checks would disrupt trade and could undermine the 1998 peace deal on the island.
But Europe is insisting on a fall-back plan, a "backstop", that would keep Northern Ireland in the customs union under EU rules while a future trade relationship is negotiated.
London has rejected this, saying it would create a border in the Irish Sea that threatens its territorial integrity.
Europe's chief Brexit negotiator Michel Barnier this week indicated a shift in his position, saying any checks between Northern Ireland and the rest of the UK could be away from the border.
May welcomed his recognition of "the need to find a new solution", and conceded that some checks were already carried out in the Irish Sea, for example on agricultural products.
"However the (European) Commission's proposal for this protocol that I should assent to a legal separation of the United Kingdom into two customs territories is not credible," she told the dinner.
May's parliamentary majority depends on support from Northern Ireland loyalists bitterly opposed to any weakening of links with the UK.
Despite continued hopes of a deal, both sides are also preparing for the possibility that Britain stumbles into a chaotic and damaging break-up.
Kurz said that failing to reach a deal "would be difficult for Europe but it would be terrible for the UK".
Officials say that 80 percent of the divorce settlement is agreed, but that progress must be made quickly on Ireland and on the parallel political statement that will lay out a blueprint for future relations.
London wants a detailed outline of future trade ties in exchange for paying billions of euros the EU says it is owed in dues.
Brussels appears ready to fudge a plan to at least get the UK departure from the bloc out of the way, although this may not be acceptable to May's restive MPs at home.
One EU diplomat told AFP that leaders in Salzburg wanted to give May something to take back home, ahead of a meeting of her fractious Conservative party next month.
They realise May is the only one who can seal a deal on Brexit and they do not want her to "go belly up", the diplomat said.