The UK government and the European Union have hailed a “breakthrough” in the Brexit talks after an agreement was reached on a transition phase to the end of 2020.
The agreement announced by Brexit secretary David Davis and EU chief negotiator Michel Barnier sets out the terms for the post-Brexit transition deal to apply from March 2019 to 31 December 2020, but the proposal revealed there is still no agreement on how to avoid a hard Irish border.
Talks will now continue on how to avoid customs checks between the Republic and Northern Ireland after Brexit.
Significantly, the EU's ‘backstop’ position – which would see Northern Ireland remain in the customs union if no solution to the border issue can be found – will be included in the final withdrawal agreement.
Britain has also agreed that any EU citizens arriving in the UK after the Brexit date of 29 March 2019 will have the same rights as those arriving before, despite Theresa May previously saying that would not be the case.
The UK government has also agreed that it will only have the right to be "consulted" on fishing quotas during the transition period.
Barnier said that during the transition period, Britain will "preserve all the benefits, advantages of the single market and the customs union and European policies and will therefore be required to respect all the European rules just like member states do".
Davis added: "We must seize the moment and carry on the momentum of the last few weeks. The deal today should give us confidence that a good deal for the UK and EU is closer than ever before."
Responding to the agreement, the Institute for Government programme director Jill Rutter said that the big achievement was converting political language into an agreed legal text, adding: “We now know what transition could look like.”
However, she said that “the UK has caved in on most points”, as the standstill transition means the UK still has all the obligations of an EU member – but loses its right to influence.
Rutter also said that the agreement was “still not sufficient to call off contingency planning”.
Departments across Whitehall are undertaking preparatory work for Brexit, with Treasury documents earlier this month stating that departments have “prioritised” no-deal scenario planning on borders arrangements for the UK’s departure from the European Union and are “actively” preparing for such an outcome.
Rutter highlighted that the agreement will not have legal force until it is agreed and ratified by the European Council, the European Parliament and the UK Parliament, so it "shows necessary progress, but still not sufficient to call off contingency planning".
“The acid test is whether today’s agreement gives business – or government – sufficient confidence to abandon their contingency planning,” she added. “The chances of 'no deal' have receded – but they have not disappeared."
In the Spring Statement last month, chancellor Philip Hammond set out departmental allocations from the £1.5bn available for departments to prepare for Brexit. The Home Office topped the list with an allocation of £395m, followed by £310m for the Department for Environment, Food and Rural Affairs and £260m for HM Revenue and Customs.
Rutter also highlighted that the issue of how to avoid a hard border on the island of Ireland remained unresolved, and no one has yet managed to identify a workable way forward that reconciles the political desire to avoid a “visible border” with the practical requirements of managing the EU’s external border with a third country. “This could yet prove a stumbling block,” she warned.