Boris Johnson and Ursula von der Leyen poised to announce Christmas Eve Brexit trade deal

Eric Mamer, the chief spokesman for Ursula von der Leyen, the European Commission President, tweeted just after midnight: “#brexit work will continue throughout the night. Grabbing some sleep is recommended to all brexitwatchers at this point. It will probably be an early start tomorrow morning…”

The upbeat mood that a breakthrough was imminent was confirmed by one EU source, who said: “The stars have aligned.”

UK stocks rose on the markets and the pound gained against the US dollar and the euro as traders bet on a deal being struck ahead of Christmas Day.

If, as expected, a trade agreement is announced later this morning, Westminster will be recalled next week, so MPs can vote on it. EU leaders are expected to agree a “provisional application” of the deal from January 1 with MEPs voting later next month to ratify it.

While politically securing a last-minute deal will be seen as a triumph for the Prime Minister, the full effects of Brexit and life beyond the EU are still to be felt for a nation struggling to battle against Covid-19 and all the challenges that is bringing.

A trade deal will mean UK businesses can continue trading with full access to the EU’s single market without any tariffs or limits on their goods. The EU is Britain's biggest overseas market, accounting for 43 per cent of all exports.

A deal covering the UK-EU trading relationship worth almost £670 billion will come as a relief to business leaders.

If, as expected, it provides for trade free from tariffs and quotas the economic shock of breaking away from the EU’s single market and customs union will be softened.

The Office for Budget Responsibility had forecast that a no-deal Brexit could wipe 2% off Gross Domestic Product – a measure of the size of the economy – in 2021, adding to the damage to jobs and livelihoods already caused by coronavirus.

With the deadline fast approaching, minds in London and Brussels have spent the last few weeks concentrating on the nitty gritty of overcoming the final obstacles on the key sticking points of fishing quotas and competition rules.

As pizzas were delivered late last night to the European Commission’s headquarters in Brussels, officials from both sides were dotting the is and crossing the ts on the legal text.

With just days to go to the transition deadline, UK and EU negotiators dug in their heels, insisting the other side had to move and the likeliest outcome was fast becoming a no-deal.

Self-imposed deadlines came and went and the mood from both sides was getting grimmer.

Only days ago, Mr Johnson made clear it was “very, very likely” that Britain would leave the transition period without an agreement but stressed that, under what he termed Australia-style terms, the country would “prosper mightily”. Yet many feared the economic consequences of the imposition of tariffs and quotas on trade with the EU would be devastating.

However, in the last few days as the clock ticked down, the atmosphere appeared to turn more positive as officials burned the midnight oil to bridge key differences.

Early on Wednesday, Downing Street suddenly struck a more upbeat than usual tone with a senior source declaring that the announcement of a deal before Christmas Eve was now “possible” although not certain.

Mr Johnson and Ms von der Leyen were said to be in close contact to resolve any last-minute difficulties and their interventions were said to have been key in pushing the deal over the line.

As expectations of an agreement announcement grew and talks continued at the Berlaymont building – there was even a suggestion of a press conference last night - Mr Mamer teased about the “suspense” of waiting by sharing a photograph of several boxes of pizzas. He tweeted: “Pizza has arrived…Is it Frutti di mare? Or Bismarck? Or good old 4 stagione? Suspense…”

Earlier, Clement Beaune, the French Europe Minister, warned a no-deal outcome would be “catastrophic” for the UK and suggested the EU should hold out.

“We should not put ourselves, Europeans, under time pressure to finish by this hour or that day, “ he declared, adding: “Otherwise, we would put ourselves in a situation to make bad concessions.”

Meanwhile, Micheal Martin, the Taoiseach, raised the prospect of officials working on the text of a Brexit deal on Christmas Day if a breakthrough came before then.

The Irish PM said he and other EU leaders were on stand-by to endorse any agreement that might emerge from negotiations between Brussels and the UK Government.

“On balance, given the progress that has been made, there should be a deal,” he insisted.

Of course, even though the UK Government and the Commission might agree a deal, each has to get it formally ratified.

While this is a more involved process for the EU, given there are 27 member states and each has to endorse a deal, it is not thought after such an arduous process that there will be any veto.

At home, however, Mr Johnson will have to sell it to MPs. While it seems certain Labour, under Sir Keir Starmer, will back the deal, believing it better than a no-deal, some right-wing Brexiteer Tories could be harder to convince of its merits.

At Westminster, the European Research Group of hardline pro-Brexit Conservative MPs made clear they would scrutinise any agreement in forensic detail; it is said to run to some 2,000 pages. The group said it would reconvene its so-called “star chamber”.

“Assuming a deal between UK and the EU is officially confirmed tonight, the European Research Group will tomorrow reconvene the panel of legal experts, chaired by Sir William Cash MP, to examine the details of the deal and legal text.

“The team of highly-experienced lawyers, previously known as the ‘star chamber’, was first assembled in 2019 to examine the legal aspects of Theresa May’s original Withdrawal Agreement.

“Given that the new agreement is also highly complex, the star chamber will scrutinise it in detail, to ensure that its provisions genuinely protect the sovereignty of the United Kingdom after we exit the transition period at the end of this year,” added the ERG.

But it is not only hardcore Eurosceptics who could be critical of a deal.

Lord Barwell, Theresa May’s former Chief of Staff, said: “The truth is the deal means the introduction of significant barriers to free trade,” through customs and regulatory checks.

However, the Tory peer acknowledged: “It is better than no-deal and we could certainly do with some good news.”

In the trade talks, it appears the issue of fishing rights was the last piece of the puzzle to be slotted into place.

The UK had made clear it would become an independent coastal state with full sovereignty over its waters from January 1 as this is what people voted for in the 2016 referendum. Consequently, London insisted the UK would keep a larger share of the catch.

But the EU, and President Emmanuel Macron in particular, wanted to retain most of its current quota.

Michel Barnier, the EU’s chief negotiator, argued for a 10-year transition period so that a 25 per cent reduction in what EU fleets catch in UK waters could be phased in. The UK wanted a 35% reduction with a six-year transition. It appears that the deal involves a 25% reduction with a five-and-a-half- year transition.

Sources out of Paris claimed the UK had made “major concessions” on fishing but this was strongly denied by London.

On competition and the so-called “level playing field,” the two sides appear to have agreed on establishing an arbitration panel, which would decide if one side had been hard done by, allowing for sanctions in the form of tariffs if either side undercut the other’s rules and regulations in a serious way.

If the deal is confirmed later this morning, it will bring to an end one of the most fraught process in modern political history that has seen years of turmoil in Westminster, played heavily into the debate about Scottish independence and the holding of another referendum and seen the Conservative Party lose two leaders and prime ministers.