Member states are due to decide whether or not “sufficient progress” has been made on the core separation issues at a summit next month, with the divorce bill, the Irish border and citizens’ rights still yet to be agreed on.
Once a deal has been made, the two sides can begin to discuss the issue of trade after the exit.
German government spokesman Steffen Seibert said: “Further progress is required, time is very pressing.”
According to the EU chief negotiator Michel Barnier, the progress of the negotiations has not been sufficient, even after the sixth round of talks last week.
Mr Seibert said: “It is understandable that the EU’s chief negotiator, Michel Barnier stresses how urgent it is for Britain to act promptly, to make proposals.”
This comes as Mr Barnier has said the bloc is drawing up contingency plans for the possible collapse of the talks.
Prime Minister May has warned that the UK Government would not offer concessions on the key issues if she thought they would be rejected and weaken the UK’s position.
Last week Mr Barnier gave the UK a two-week deadline to provide greater clarity on the financial settlement it was prepared to offer as part of the divorce deal.
However, Mrs May could decide to ignore the deadline and present her final case to the December EU summit.
EU diplomats have warned that is the two-week deadline is not met, trade talks will be delayed until at least February next year.
Businesses in Britain and in the EU have put pressure on the Government to make a deal amid concerns that a transition period would delay Britain’s attempts to strike new independent deals.
Manfred Weber, the German leader of the largest party in the European parliament, said: “In the coming weeks we we will see whether a constructive outcome is possible or whether the uncertainty will continue to grow.
“In December it doesn’t look like we will be entering into the second phase.”