BRUSSELS is threatening to deal a blow to UK hopes of entering swift trade talks after a landmark Brexit deal will see Britain paying a divorce bill of up to £39 billion.

This works out at £1,400 for each of the country’s 27 million households.

Hours after Theresa May clinched a Brexit "breakthrough," Donald Tusk, the European Council President, set out guidelines for the next phase of talks, covering the transition to a post-Brexit relationship. They envisage the UK staying in the single market and customs union and observing all EU laws for around two years after the official departure date in March 2019.

He made clear only "exploratory talks" on a free trade agreement could begin at this stage while Michel Barnier suggested "real negotiations" on trade would only get under way once a withdrawal treaty was finalised next October.

The EU's chief negotiator also threw cold water over the Prime Minister's hopes for a "deep and special" trading relationship with the EU by warning that her "red lines" of taking the UK out of the single market, the customs union and the jurisdiction of the European Court of Justice would leave a free trade deal similar to Canada's as the only option open to Britain.

Downing Street made clear the UK would be leaving the single market and customs union in March 2019 but noted how Mrs May had acknowledged during the two-year implementation period “things will be on very similar terms as now”. Her spokesman noted: “Precisely what that looks like is obviously a matter for negotiation.”

In response to Mr Barnier’s comments on a future trade deal, he stressed: “The Environment Secretary[Michael Gove] said he believed we can do much better than Canada. We believe we can get a very ambitious trade deal.”

After a rollercoaster week of political turbulence sparked by the Democratic Unionists’ veto of the UK Government’s initial proposal on the Irish border, Mrs May, after days of frenetic telephone diplomacy, made a pre-dawn flight to Brussels to seal what she called a “hard-won agreement in all our interests".

Jean-Claude Juncker, the European Commission President, welcomed the “compromise” deal, which he said signalled “sufficient progress” had been made in the process so that talks on transition and trade could begin.

Pointing to next week’s EU summit, he said: “I am hopeful, sure, confident…they[the EU27] will share our appraisal and allow us to move on to the next phase of the negotiations.”

The pound rose on news of the breakthrough.

The estimated Brexit bill of between £35bn and £39bn is significantly lower than suggested by previous leaks, which put it at £50bn or more.

It covers Britain's share of the EU's budget up to the end of 2020 as well as outstanding debts and liabilities for items such as the pensions of staff at European institutions.

It will be paid over several years and the exact figure is unlikely to be known for some time.

While the guarantee of rights for three million EU citizens in the UK and one million Britons on the continent was hailed, there was consternation among some Brexit-backers over provisions allowing the European Court of Justice a role in overseeing EU citizens' rights in the UK for eight years after Brexit.

But Downing Street made clear it only expected around two or three cases a year to be referred to the Luxembourg court and stressed that it would be at the discretion of British judges to do so.

However, on what has transpired as being the biggest hurdle in the phase one talks, the Irish border, there remained a good deal of uncertainty.

The joint UK-EU statement said Britain would seek to get an agreement through the overall deal but, if that were not possible, would propose “specific solutions” to address the island of Ireland’s “unique circumstances”.

Yet, if no agreement at all could be reached, then the UK would “maintain full alignment” with the rules of the single market and the customs union.

David Jones, the former Brexit minister, warned such an arrangement could "severely handicap" Britain's ability to enter free trade agreements covering areas like agriculture with countries outside the EU such as the US.

But fellow Brexiteers Boris Johnson, the Foreign Secretary, and Mr Gove gave their public blessing to the deal. The Environment Secretary described it as a "significant personal political achievement for the Prime Minister," which would make more money available for the NHS.

The development was also welcomed by business leaders, who had warned that companies would begin activating plans to move staff and activities abroad if no progress was made by Christmas.

In Edinburgh, Nicola Sturgeon said the Brexit breakthrough was a “welcome step forward" but warned the negotiations were set to get "significantly tougher".

The First Minister also noted: “A UK government that is able to say that, come what may, it will avoid hard borders with Ireland/NI after Brexit can never again tell Scotland that independence would mean a hard border between Scotland and rUK."

Jeremy Corbyn said Mrs May had only managed to "scrape through" the first phase of Brexit negotiations some 18 months after the referendum.

"Tory chaos and posturing has caused damaging delay and risked serious harm to our economy," declared the Labour leader, adding: “We need a much stronger and more constructive approach in crucial phase two."

Meanwhile, Nigel Farage, the former Ukip leader, said the 17.4m people who backed Leave last year "did not vote for a large exit fee, the ECJ continuing to have a say over our country or a two-year transition". He added: "This is not a deal, it's a capitulation."

Mrs May is expected to make a Commons statement on the Brexit deal on Monday.