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17 July 2017, 03:44 | Terri Saunders
Pro-Leave supporters holding a Union Jack flag celebrate after Leave won in London
'We need to examine and compare our respective positions in order to make good progress'. In a tacit acknowledgment that last month's opening of negotiations had achieved little, Davis said it was now crucial to "get into the substance of the matter".
At the start of the Brussels talks, Mr Davis - whose allies claim 30 Tory MPs are ready to back him if he runs for the leadership - is expected to call for both sides to get down to business.
Davis and Barnier shook hands for the cameras at the European Commission's Berlaymont headquarters before a first full session of a scheduled four days of talks.
The EU has demonstrated increasing confidence in recent weeks, accusing Britain of dithering over whether it wants a "hard" or "soft" Brexit more than a year after the shock referendum that propelled May to power.
It's the second such meeting - the first round in June saw Britain concede to the EU's demand to first focus on discussing citizens' rights, the Irish border and a financial settlement.
Fox also said it would be "foolish" to go into the Brexit negotiations without being prepared to walk away, saying Britain's negotiating partners needed to believe Britain would do so rather than accept a bad deal.
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Crucially, last month, Mr Davis caved in to the EU's insistence that the talks would move on to trade only when "enough progress" had been made on Brussels' three priorities. Diplomats had feared a collapse in talks after the foreign secretary, Boris Johnson, caused confusion with his statement that the European Union should "go whistle" for the "extortionate" sums "they have demanded".
"We're seeing the division at cabinet level laid increasingly bare", said Ned Rumpeltin, head of currency strategy at The Toronto Dominion Bank in London, who sees the pound falling to US$1.26 (RM5.40) by the end of this quarter.
"I hope very much that people will look at that offer in the spirit it deserves", he told reporters.
Brexit hardliners in the Cabinet and on the Tory backbenches are furious with Mr Hammond for championing a two-year transition deal to cushion the impact of leaving the EU.
The tensions have shaken the British government, which on Thursday introduced the draft law that would formally put an end to Britain's membership of the European Union.
May faces a battle over the bill, which opponents said included a risky "power grab" by London at the expense of Scotland and Wales.
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