Brexit talks between Brussels and London will continue until Wednesday as the two sides are yet to reach a breakthrough on key issues related to the Irish border, according to diplomats.

EU27 ambassadors were briefed on Sunday afternoon by the bloc’s chief Brexit negotiator, Michel Barnier, on intensive talks held between the EU and U.K. over the weekend, and negotiators are still trying to find agreement on how to avoid a hard border between Northern Ireland and Ireland, diplomats say.

"No breakthrough yet, but the good news is: intensive talks are continuing,” an EU diplomat said.

Negotiators have been working on several potential solutions including a deal that would in effect keep Northern Ireland in the U.K.’s customs territory but apply EU tariff rates at its external border, although officials say it is still unclear how this will work.

Diplomats say they are still “cautiously optimistic” that a deal can be reached although they also say they are “skeptical” it can be done by Wednesday when EU27 ambassadors will meet again to discuss the state of play ahead of a two-day European Council summit of EU leaders starting Thursday.

"If the British government wants a solution, it must move quickly now. The clock is ticking” — EU diplomat

One senior diplomat said the customs compromise is “still a big hurdle.”

“We still have to work on almost everything but meetings have been constructive,” said another diplomat.

The European Commission also called the talks “constructive” in a statement after Barnier’s briefing, adding that “a lot of work remains to be done.” Discussions at the technical level will continue Monday and Barnier will brief EU ministers at a meeting on Tuesday, the Commission added.

The first EU diplomat said the starting position of the next round of talks will be “complicated,” especially because it comes right before the EU leaders’ summit.

"If the British government wants a solution, it must move quickly now. The clock is ticking,” said the EU diplomat.

One of the remaining obstacles in reaching a deal, according to diplomats, is that the U.K.'s Brexit adviser David Frost has his hands tied when it comes to moving on key issues, like keeping Northern Ireland in the EU customs union and getting the consent of Northern Ireland lawmakers, which London has demanded.

Talks began to show signs of progress last Thursday after a meeting between U.K. Prime Minister Boris Johnson and his Irish counterpart, Leo Varadkar, leading Barnier to announce Friday the resumption of serious talks. But time is running short to get a deal agreed ahead of the EU leaders’ summit and Brexit day on October 31.

Diplomats say that the possibility of an extension wasn't discussed in-depth at Sunday's meeting but it was mentioned as something that will need to be considered at some point. “All scenarios are open,” said one of the diplomats.

On Sunday, European Commission President Jean-Claude Juncker said he would back a further Brexit extension, if the U.K. asks for one. Johnson has promised to take the U.K. out of the EU deal or no deal on October 31, though the British parliament passed legislation to force the government to seek a delay.

“It’s up to the Brits to decide if they will ask for an extension,” Juncker told the Austrian newspaper Kurier. “But if Boris Johnson were to ask for extra time — which probably he won’t — I would consider it unhistoric to refuse such a request.”

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