Sky News has been told that Michel Barnier, the European Commission's top Brexit negotiator, wants to discuss "pending issues" - such as UK payments to the EU, border issues and the single market - at the same time as considering a post-Brexit transition deal.
Under the EU's plan, a "final deal" or "association agreement" for any long-term trade relationship - the third tier - would only be discussed after these first two stages have been agreed.
It will come as a blow to UK Brexit Secretary David Davis, who told counterparts in Brussels this week that Britain wanted to agree the final deal within the negotiation period for the first two - what has come to be known as "parallelism".
And when questioned this week about the possibility of a transition deal, Theresa May said: "People don't want a cliff-edge, they want to know with some certainty how things are going to go forward."
Sources in EU capitals are working on the assumption that the "crux of the negotiations" will occur in the fourth quarter of 2018.
However, there is some expectation the UK will not be in a position to trigger Article 50 by the end of March as planned, due to legal hurdles. [...]
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