The second phase of Brexit talks could be delayed until Christmas, according to Westminster sources.

The second negotiation round will outline the future trading relationship between the UK and the EU – however European negotiators have insisted there must be "sufficient progress" on the current round of talks first.

The first round includes discussions on money, citizenship rights and the Irish border.

Talks on future trading were due to begin in October - but British Cabinet ministers have indicated that progress will now be delayed for two months.   

As a result, negotiators will have less than a year for talks on the future trading relationship.

In Brussels, European chief negotiator Michel Barnier was reported last month to have told EU ambassadors that his recommendation to the European Council of "sufficient progress" on the first phase of talks was "highly unlikely".

That was put down to the refusal of UK negotiators to engage with a formal response to the EU's position paper on financial liabilities, which could yield a so-called exit bill of up to £50bn (€55bn).

Better progress and more formalised negotiations have taken place on EU citizens' rights.

On Wednesday the UK published its report on the Northern Ireland border. The EU is expected to publish its position paper on Ireland early next month.

Three negotiation sessions are scheduled before the October European Summit.

Brussels sources indicated that the August session beginning on bank holiday Monday was likely to be more of a fact-finding session, and that crunch time would be in September and October.

Any delay in approving the next stage of negotiations would also delay the start of talks about a transition arrangement.

A number of businesses have expressed concern that contingency plans for a cliff-edge WTO-terms Brexit will have to be activated if a transition is not agreed by the end of the year.