With only six months to go before the U.K. leaves the European Union, the pace of the Brexit negotiations has been stepped up, the U.K.'s finance chief told CNBC on Friday, adding that he feels "more optimistic today" compared to a few weeks ago. However, there are still some "very intractable differences" between both sides of the English Channel that need to be resolved. "Over the last week or so, there has been a very definite step change in the pace around the process. The (European) commission is now clearly engaged, there is a sense of urgency and a sense of both sides really trying to breakthrough and solve these knotty problems," Philip Hammond, chancellor of the exchequer, told CNBC in Bali. "But I would not want to give any sense that the knottiness of the problems themselves has gone away. There are still some very intractable differences between us, but there is a much clearer sense that we are working together on these shared problems that we are trying to resolve," Hammond told CNBC's Geoff Cutmore. Brexit negotiators are working against the clock as they try to reach a breakthrough over the Northern Irish and Irish border issue by Monday.

Britain's Chancellor of the Exchequer Philip Hammond waits for Britain's Prime Minister Theresa May to give her keynote address on the fourth and final day of the Conservative Party Conference 2018 at the International Convention Centre in Birmingham, central England, on October 3, 2018. OLI SCARFF | AFP | Getty Images

The idea is to have the so-called "backstop" plan ready to ensure that under no circumstances, once the U.K. leaves the EU, there will not be a hard border between Northern Ireland and the Republic of Ireland. If all goes well, Prime Minister Theresa May and the other 27 EU leaders could say as early as Wednesday that they are ready to finish the Withdrawal Agreement and take it to their own parliaments for ratification. Hammond told CNBC that "it's highly ambitious" that the Withdrawal Agreement will be ready by the end of next week, after a European summit scheduled to take place in Brussels on Wednesday and Thursday. But, according to the U.K.'s finance minister, the European heads of state only need to agree that there has been "significant progress" to continue with the process and then close it at an emergency meeting during the month of November. "If we don't reach a deal in October, at least we are making sufficient progress that everyone can see that is sensible to come together again in November for that last push to get there."

In such a scenario, the Withdrawal Agreement would then be taken to the different parliaments for ratification, which would have to be concluded at the start of next year, before the March 29 deadline — when the U.K. officially leaves the EU. Hammond also told CNBC that there has been a change in attitude from the side of the European Commission, the institution responsible for negotiating Brexit on behalf of the other 27 EU countries. "I can tell you that personally I think I feel more optimistic today than I did a couple of weeks ago, because we have been frankly complaining for some time that the other side wasn't really engaging with us, didn't seem to share our sense of urgency. That has gone away. It is absolutely clear now that the other side is trying to move this forward."

'That's good news'