The agreement was announced jointly this morning in Brussels by prime minister Theresa May and European Commission president Jean-Claude Junker after four days of intense negotiations following the Democratic Unionist Party’s refusal to accept any measures that would lead to Northern Ireland being treated differently to the rest of the UK.
Although the details of the deal have not been disclosed, May said there would be “no hard border” between Northern Ireland and the Republic of Ireland while the UK’s constitutional and economic integrity would be ensured.
There was also agreement over the rights to live, work and study of EU citizens living in the UK and UK citizens in Europe, as well as on the divorce financial settlement.
Welcoming the news, European Council president Donald Tusk announced that he had received confirmation that “sufficient progress” had been made and he set out what the next steps would be.
He said that the council would discuss the UK’s proposals for a transition period of two years during which it would stay in the single market and customs union.
He did make it clear, though, that the UK would have to continue to abide by EU laws (including new law), budgetary commitments, judicial oversight and any other related obligations. It would not have any voice in EU decision-making during that time.
Tusk said he needed greater clarity on Britain’s vision for the future of the relationship with the EU. “On our side, we are ready to start preparing a close EU-UK partnership in trade, but also the fight against terrorism and international crime as well as security, defence and foreign policy.”
However, he warned that the most difficult challenge was still to come. “We all know that breaking up is hard. But breaking up and building a new relation is much harder.
“Since the Brexit referendum a year and a half has passed. So much time has been devoted to the easier part of the task, And now to negotiate transition arrangement and the framework for our future relationship, we have de facto less than a year.”
Nevertheless, the UK business community was in positive mood this morning. British Chambers of Commerce director general Adam Marshall said that businesses would be “breathing a sigh of relief” that sufficient progress has been achieved.
“After the noise and political brinksmanship of recent days, news of a breakthrough in the negotiations will be warmly welcomed by companies across the UK.”
“Business will particularly cheer the mutual commitment to a transition period to support business confidence and trade, and will want the details confirmed swiftly in the new year when negotiators move on to the big questions around our future trade relationship with the EU.”
Mike Cherry, national chairman of the Federation of Small Businesses, was delighted with the guarantee on the rights of EU citizens in the UK, which is something the FSB has been pushing for.
“Small firms with EU citizens in their workforce will be relieved to give their staff the certainty they need about the protection of their rights. As we leave the EU, businesses will need to continue to be able to find the workers and skills that they require, and today’s pledge is an encouraging sign of a sensible, pro-business attitude.”
Stephen Martin, director general of the Institute of Directors, agreed. He said that the most pressing concern for UK companies had been their EU staff, who had urgently needed certainty about their future in the UK. “We have grounds to hope now that our members will be able to send their employees off for the Christmas break feeling more comfortable about their status here,” he said.
CBI deputy director general Josh Hardie also used a seasonal analogy to express how his business members felt on hearing the news. “Firms have been watching negotiations closely and today’s announcement will lift spirits in the run up to Christmas. Sufficient progress is a present they’ve spent months waiting for.”
All the business representatives were adamant that speed will now be of the essence in negotiating the trading relationship.
The BCC's Marshall summed it up. “For business, a swift start to trade talks is crucial to upcoming investment and growth decisions. Companies all across the UK want absolute clarity on the long-term deal being sought, and want government to work closely with business experts to ensure that the details are right.
“Businesses want answers on what leaving the EU will mean for regulation, customs, hiring, standards, tariffs and taxes. The job of the UK government and the European Commission now is to provide those answers – and do everything in their power to ensure vibrant cross-border trade between the UK and EU countries can continue.”
Cherry wanted to see a guarantee by early next year “that there will be no cliff-edge moment on Brexit day, but instead an orderly, time-limited transition period so that small firms only have one set of rule changes”.
“The final deal must have as few barriers to trade as possible,” he said.
Like Donald Tusk, business is only too well aware of the difficulties ahead. As Karen Briggs, KPMG’s head of Brexit observed, “The Irish border issue showed how fragile Brexit discussions can be and now negotiation failure could happen at the end of the talks rather than at the start.
“That’s why companies are planning for a no deal scenario and some are already making investment decisions they can't reverse.”
And KPMG UK vice chair James Stewart urged government to explain its views on the way forward. “To give firms confidence, we need a clear vision on the sort of country we wish to become and rapid progress on a status quo transition before it becomes too much of a wasted asset.
“We also need to bear in mind that transition without a clear end state might only prolong the agony.”
Hardie agreed. “It’s now time to focus on the true prize of a new relationship and a deal that starts from 40 years of economic integration. With the same willpower shown today and jobs and living standards at the heart of every negotiating objective, these talks can set the UK up for the next 40 years of close alignment.”
Today’s progress, he added, showed that “careless talk of walking away” could be replaced by confidence that the UK could achieve a good deal. “Steely determination in the national interest must always come first.”
A copy of the Joint Report from the Negotiators of the EU and the UK Government on Progress During Phase 1 of Negotiations under Art 50 TEU on the UK’s Orderly Withdrawal from the EU has been published on the Number 10 website.