European Union President Donald Tusk on Friday warned Theresa May she must strike a deal on the Brexit divorce bill, migrant rights, business rules and the Irish border before trade talks can start.
Tusk made a small concession to May by indicating he would allow some talks to run side by side before the divorce is finalised - potentially towards the later part of the year.
But at a press conference Tusk confirmed ''parallel talks will not happen'' despite the Prime Minister demanding everything be discussed at once in her Article 50 letter.
The details of the EU's position were spelt out in a set of draft negotiating guidelines which represent the official response to May's historic letter. Tusk said he was not seeking a ''punitive'' deal, saying, ''Brexit is punishment enough''.
No 10 Downing Street, the UK Prime Minister's residence, said Tusk's intervention made clear ''both sides wish to approach these talks constructively''. Foreign secretary Boris Johnson said the talks were ''moving forward''.
UK government sources told MailOnline it was a ''major conciliatory move by Tusk'' to open the door to ''dual talks'' later this year.
Agreeing the cost of Brexit will be a huge sticking point in the first phase of the negotiations, as Europe is expected to demand up to £50 billion - dwarfing the £3-billion figure thought acceptable by ministers.
Striking an agreement on the rules imposed on companies after Brexit could also be difficult. Tusk's letter suggests the EU wants to stop Britain slashing taxes and regulation, which it calls a ''race to the bottom''.
Agreements on the rights of EU citizens in Britain and the Irish border will be complicated but striking a deal is firmly supported on both sides.
The draft negotiating guidelines for the EU's position in the Brexit talks demand ''sufficient progress'' be made on agreeing the divorce before trade deal talks start. Deciding when that point is reached is entirely up to the EU and is not something Britain can declare.
Tusk revealed he would visit London for talks with May next month before the other EU leaders gather for a summit on 29 April.
At the meeting, Tusk outlined a three-phase process in his draft guidelines, which have been sent to the capitals of the 27 EU member states but not London.
The first phase is to agree the terms of the divorce. Tusk's draft does not say how long this will be considered in isolation but demands ''sufficient progress'' is made.
The final deal is expected to emerge by the end of next year in time for a series of votes on ratification Brussels, London and around Europe.
If the talks collapse at any point in the two years, Britain could face leaving the EU without a deal at all.
While a transitional period is thought likely, Britain will cease to be a full member of the EU at the end of 29 March 2019.