"Considerable problems remain, which pose a fundamental question as to whether sufficient progress has been achieved," European Parliament Brexit coordinator Guy Verhofstadt wrote to EU negotiator Michel Barnier.
The EU insists there must be "sufficient progress" on the divorce issues of the bill, the rights of three million European nationals in Britain, and the Irish border, in order to unlock talks on a future trade deal at a summit on December 14-15.
Former Belgian prime minister Verhofstadt highlighted the issue of whether the EU's top court would remain responsible for upholding the rights of European expats after Britain leaves the bloc in 2019.
"It is with great concern that we note that negotiations in this respect are stalled, and even some progress reversed," Verhofstadt said in his letter.
Verhofstadt also called on Britain to make a "clear commitment" to ensuring that there is "no hardening of the border" between EU member Ireland and British-ruled Northern Ireland.
While the European Parliament has no binding say on a deal for whether the Brexit talks move on to their next phase this month, it will have a final veto on the overall withdrawal agreement when Britain leaves in 2019.
The downbeat assessment came just hours after Ireland's EU commissioner said Britain was "very close" to agreeing the size of its Brexit bill and that he hoped for "movement" within days on the Irish question.
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