BERLIN (Reuters) - Germany believes a lot has already been achieved in Brexit negotiations and Berlin is upbeat about the prospects of making further progress in the talks, a German government official said on Wednesday.

EU leaders will discuss Brexit at a summit on Thursday and Friday, when they will deliver a verdict on progress made in the talks so far. EU negotiators want “sufficient progress” to justify opening trade negotiations with Britain.

“At the moment, the assessment is it is not ‘sufficient’,” the German official said, but stressed that not all issues affecting the withdrawal of Britain in March 2019 needed to be fully resolved before discussing the future relationship.

“It is not the case that nothing has happened since the beginning of the negotiations,” the official added. “We think a lot has happened. On what is important to us, citizens rights, we’ve made a lot of progress. We are all in good spirits.”

Britain is keen to start discussions about a 2-year transition period after it leaves the EU at the end of March 2019 and a trade relationship afterwards.

But EU leaders have adopted what they call a “phased approach”. First the EU and Britain must reach agreement on the terms of their divorce -- a financial settlement, the rights of citizens and on Northern Ireland -- and talk about the transition and the future relationship only afterwards.

“We expect that the government leaders will give a strong signal for us to prepare internally for the second phase - the future relationship,” the German official said, adding:

“The big questions for the future between Britain and the European Union are much larger than these current arguments about finances. I think everyone is aware of that, and so I am confident we will come to a solution there.”

May said earlier on Wednesday Britain was working to win the best possible deal for when it leaves the EU but that government had to plan for every eventuality, including exiting without a deal.