REPORTS that the UK had agreed to settle the so-called Brexit divorce bill to the tune of up to £57 billion were being regarded as premature last night.

A newspaper made the claim but sources in Brussels warned that the divorce deal had not been finalised and there should not be too much optimism about talks moving on at the meeting of the EU’s leaders on December 14 and 15.

More worryingly for Prime Minister Theresa May, sources in the EU negotiating team were adamant that while the divorce bill issue could be settled, the problem of how the UK avoids a hard border in Ireland remains unsolved, and that could now be the dominant issue.

The Republic of Ireland has insisted on “a road map” to show how the UK intends to avoid a new border, especially after International Trade Secretary and arch-Brexiteer Liam Fox ruled out Northern Ireland staying in the single market and the customs union – a stand that has not been contradicted by 10 Downing Street.

The good news for the May government, which is under huge pressure from Tory Brexiteers to pay no divorce bill at all, is that the money will not have to be paid in a lump sum, under an agreement between the Westminster government and the EU’s Article 50 task force.

One senior diplomat told reporters: “The divorce bill should be fine now. That was the big issue. And then it wasn’t. The border is the big worry. And I don’t know how they can square that circle. That is the big one now and it is up to the Irish to decide.”

European national governments and their envoys in Brussels, speaking anonymously, told a news agency that an agreement on the bill hasn’t yet been sealed, but they said talks are going in the right direction. EU leaders have the final say on any deal.

Senior diplomats in Brussels said they were confident that the financial settlement would not now hold up the talks. “I think Germany, who has been strong on this, will be happy enough and the French will follow their lead,” one source said.

The UK had committed £660 billion to the EU’s seven-year budget ending in 2020, including pension costs and outstanding loans.

Getting out in March 2019 will leave the UK facing a gross financial settlement of £89bn, according to EU negotiators, though the Government is arguing that it should pay only half that sum.

The pound rose against the dollar in the wake of the reports but was still well down against the dollar and the euro on the levels it was trading at before the referendum in June last year. Against the euro, sterling rose more than one per cent to €1.1271.

May and European Commission President Jean-Claude Juncker are due to meet on Monday when it is expected that the divorce bill will be all but finalised – the actual final sum can’t be calculated as it is dependent on pension payments.

But that would allow EU leaders at their summit in the middle of next month to say that progress has been made and trade talks can go forward, though the Irish border problem may yet scupper all eventualities.