Brexit breakthrough after days of frenetic diplomacy

The pound rallied and the FTSE 100 edged higher on the news.

The deal on phase one of the talks - agreement on no hard border with Ireland, guaranteeing the rights of four million citizens and a divorce settlement in the region of £50 million - is now expected to be ratified by the leaders of the EU27 at next week’s European Council to move the process on to phase two dealing with Britain’s future relationship with the EU.

Mr Juncker thanked the Prime Minister "for her determination" as he announced the Brexit breakthrough.

He also praised the "extremely hard and skillful work over the last weeks and months" of Michel Barnier, the EU’s chief negotiator, and David Davis, the  Brexit Secretary, as well as their teams.

“Today's result is, of course, a compromise. It is the result of a long and intense discussion between the Commission negotiators and those of the UK.

"As in any negotiation, both sides have to listen to each other, adjust their position and show a willingness to compromise. This was a difficult negotiation for the European Union as well as for the United Kingdom,” admitted the Commission President.

He added: “I am hopeful, sure, confident, sure, that they[the EU27] will share our appraisal and allow us to move on to the next phase of the negotiations.”

Mrs May described the agreed text as a “significant improvement” on the proposal made on Monday, which was dramatically rejected by the Democratic Unionists on the issue of the Irish border.

“Getting to this point has required give and take on both sides. And I believe that the joint report being published is in the best interests of the whole of the UK,” said the PM.

On the key issue of citizens’ rights, she explained: “The deal we've struck will guarantee the rights of more than three million EU citizens living in the UK and of a million UK citizens living in the EU.

"EU citizens living in the UK will have their rights enshrined in UK law and enforced by British courts. They will be able to go on living their lives as before."

On the Irish border, Mrs May said: “In Northern Ireland we will guarantee there will be no hard border and we will uphold the Belfast Agreement. And in doing so we will continue to preserve the constitutional and economic integrity of the United Kingdom.

"We have taken time this week to strengthen and clarify this part of the agreement, following discussions with unionists in Northern Ireland and across the UK.“

(PA graphic)

The breakthrough is a big political moment for the PM, who had been under massive pressure following the embarrassing development on Monday when Northern Ireland’s Democratic Unionists vetoed her proposal for “regulatory alignment” on trade between Northern Ireland and the Irish Republic.

This proposal alarmed the DUP as it would, it believed, split off Northern Ireland from the rest of the UK and move the border to the Irish Sea. Ruth Davidson, the Scottish Conservative leader, contacted the PM to protest that such a plan would “unravel the Union”.

At Westminster, Mr Davis and then Mrs May had to reassure MPs that nothing would be done to undermine the “constitutional and economic integrity of the United Kingdom”.

Negotiators explained that the UK would remain “fully aligned” to EU rules supporting Irish cross-border arrangements if no deal were agreed.

Without an agreed solution the UK would maintain "full alignment" with EU internal market and customs union provisions which underpinned North-South co-operation, the all-island economy and the protection of the 1998 Good Friday Peace Agreement which largely ended decades of Northern Ireland violence, the text disclosed.

The UK said it "remains committed" to protecting North-South co-operation and its guarantee of avoiding a hard border.

The joint report from EU and UK negotiators confirmed: "Any future arrangements must be compatible with these overarching requirements." The UK's intention is to achieve this through the overall EU-UK relationship.

The DUP welcomed the "substantial progress" achieved in the agreement between the UK and EU but cautioned that much more work was needed on managing the Irish border post-Brexit.

Arlene Foster, the party’s leader, said her party worked with the Government into the early hours of Friday to secure changes to the original text it rejected on Monday.

Mrs Foster said Northern Ireland would now leave the single market and customs union and insisted there would be no border down the Irish sea, dividing Northern Ireland from the rest of the UK.

"There will be no so-called 'special status' for Northern Ireland as demanded by Sinn Fein," she declared.

The DUP leader explained: "Northern Ireland will not be separated constitutionally, politically, economically or regulatory from the rest of the United Kingdom, and the joint UK-EU report at the conclusion of phase one makes clear that in all circumstances the United Kingdom will continue to ensure the same unfettered access for Northern Ireland's businesses to the whole of the UK internal market."

Mrs Foster was keen to stress there was "still more work to be done".

Her DUP colleague Sammy Wilson made clear he was "not entirely happy" with the agreement, stressing he would like to have seen the phrase "full alignment" taken out of the text agreed by the UK and EU.

But he noted how the new text was a huge improvement from what was being proposed on Monday, which he said risked seeing Northern Ireland "being cut adrift" from the rest of the UK and being left "half in" the EU.

The agreement, he added, ensured that Northern Ireland would leave the EU "on the same basis" as the rest of the UK.

In Dublin, Leo Varadkar, the Irish Taoiseach, said the Brexit deal had "achieved all we set out to achieve" but he added: "This is not the end, it is the end of the beginning."

The announcement that Brexit talks are now set to move on to issues of trade and transition was welcomed by UK business leaders.

But opposition politicians questioned whether the deal struck between the UK and the European Commission would satisfy hardline Brexiteers on the Conservative benches.

Stephen Martin, Director General of the Institute of Directors, said: "It went right down to the wire, but businesses will be breathing a huge sigh of relief."

A spokesman for the Liberal Democrats, who are fighting for UK voters to be given a second referendum on any final Brexit deal, said: "So Theresa May has finally got a deal, but how long before it's torn apart by her own MPs?

"It should be the British people, not Tory Brexiters and DUP, who get to decide whether this deal is good enough."

The Lib Dem spokesman said there was "still no solution over how to prevent a hard border between Northern Ireland and Ireland" in the text of the joint report.

"A huge obstacle to the Government's Brexit plans is being kicked into the long grass," he said.

Several politicians took to Twitter to give their initial reactions.
 

Nicola Sturgeon tweeted: "Move to phase 2 of talks good - but devil is in the detail and things now get really tough.

"If #Brexit is happening (wish it wasn't) staying in single market & customs union is only sensible option. And any special arrangements for NI must be available to other UK nations," added the First Minister.

Mr Barnier posted a video of a sprinter jumping hurdles with the caption: "First #Brexit hurdles taken ... more to come."

Mr Davis said: "Today is a big step forward in delivering Brexit. Been a lot of work but glad the Commission have now recommended that sufficient progress has been reached.

"Citizens can now be confident about the rights they enjoy; we should now move forward to discuss our future relationship with the EU on issues like trade and security."

Amber Rudd, the Home Secretary, tweeted: "Delighted we've reached an agreement which will give both Europeans here in the UK and British citizens in the EU binding guarantees about their residence rights.

"I hope this will now give those concerned real peace of mind. We are building a new system so that the application process will be smooth and simple. For now, EU citizens in the UK, do not need to do anything."

Chancellor Philip Hammond congratulated the Mrs May, saying on Twitter: "Delighted a deal agreed in Brussels that paves way for further progress on talks about future UK/EU relationship. A positive step.

"Today's announcement in Brussels is a boost for Britain's economy. Now let's conclude a trade deal that supports Britain's jobs, businesses and prosperity."

But Nigel Farage, the former Ukip leader, had a different take, tweeting: "A deal in Brussels is good news for Mrs May as we can now move on to the next stage of humiliation."
 

As Downing Street clammed up on Thursday, refusing to comment in detail on any contacts Mrs May was having with other people or parties, the only pointer to a potential breakthrough was the announcement that Donald Tusk, President of the European Council of leaders, would make a statement at 6.50am UK time, before the markets opened.

Overnight, Sterling rose on expectations of positive developments.

In a dramatic development, at 4.57am Downing Street confirmed the PM was travelling to Brussels accompanied by Mr Davis for further meetings with Mr Juncker and Michel Barnier, the EU’s chief negotiator.

Just after 6am Mrs Foster said she had had clear confirmation the whole of the UK was leaving the European single market and customs union.

Moments later, in an apparent sign that a Brexit deal had been done, Martin Selmayr, Mr Juncker's head of Cabinet, tweeted a photograph of white smoke gushing from the chimney of the Sistine Chapel; the traditional way of signalling that a new Pope has been chosen.

Some of the key events that have led to this point:

*January 17 - Prime Minister Theresa May gives a speech at Lancaster House setting out her 12 key objectives for EU withdrawal and warning that "no deal for Britain is better than a bad deal for Britain".

*March 29 - Mrs May triggers Article 50. The historic declaration sets in motion a two-year process of negotiation of the EU treaties leading to Britain's expected withdrawal in 2019, after 46 years of membership.

*April 18 - Mrs May calls a snap election.

*June 8 - The Tories win the General Election without the mandate, securing only 317 seats.

*June 19 - Brexit Secretary David Davis and European Commission chief negotiator Michel Barnier open negotiations in Brussels.

*June 26 - The DUP backs a deal to support the minority Tory Government, with a £1.5 billion funding package for Northern Ireland secured as part of the deal.

*September 22 - Mrs May makes a speech in Florence in which she says the UK could continue to be subject to existing EU rules and regulations until 2021, and pledges that other EU nations would not be left out of pocket by Britain's decision to pull out, paving the way for an estimated payment of around £18 billion (about 20 billion euros) into Brussels budgets up to 2020.

*October 10 - The Government refuses to say whether it has carried out regional impact assessments following a Press Association FOI request because doing so would provide a "reactionary" response that could damage the economy.

*November and December - more formal negotiations take place with Mr Barnier and Mr Davis under intense pressure to break the deadlock before Christmas.

*November 14 - The EU (Withdrawal) Bill returns to the Commons for its committee stage, with the Government making a concession on a vote on the final deal in an apparent bid to stave off a rebellion by pro-European Tories on a raft of amendments to the key legislation.

*December 6 - There are calls for Mr Davis to resign as Brexit Secretary and face investigation for contempt of Parliament, after he admits that the Government has produced no impact assessments on the effect of Brexit on different sectors of the UK economy.

December 6 - Mrs May says she is committed to ensuring there is no return to a "hard border" between Northern Ireland and the Republic.

The EU insists trade negotiations can begin only after "sufficient progress" has been made on the three key divorce issues of the Irish border, citizens' rights, and the UK's exit bill.