Jean-Claude Juncker recommends Brexit talks move on to second phase after reaching "sufficient progress"

Catherine Neilan
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May arrived in Brussels early this morning (Source: Getty)

Jean Claude Juncker has recommended that Brexit talks move onto the second phase after a "breakthrough" was made early this morning.

If EU27 leaders agree at the European Council summit next Friday, that means negotiators can finally move onto discussing post-Brexit trade and transition - sneaking in ahead of the year-end deadline that businesses warned must not be missed.

The move will give reassurances to many in the City who had feared contingency plans would be implemented if sufficient progress was not granted this side of Christmas.

A report, published as Juncker gave his update, said both parties had agreed in principle the three critical points of the first phase, namely protecting the rights of European Union citizens in the UK and UK citizens in the Union; the framework for addressing the unique circumstances in Northern Ireland; and the financial settlement.

"Under the caveat that nothing is agreed until everything is agreed, the joint commitments set out below in this joint report shall be reflected in the Withdrawal Agreement in full detail," the report says. "This does not prejudge any adaptations that might be appropriate in case transitional arrangements were to be agreed in the second phase of the negotiations, and is without prejudice to discussions on the framework of the future relationship."

The report guarantees there will be no hard border in Ireland, although "full alignment" with the single market and customs union may be deployed as a last resort.

It also sets out the methodology for the divorce bill, with the UK continuing to pay into the EU's budget "as if it had remained in the Union"

It adds: "Amounts to be returned to, or returned by, the UK will be calculated as if the UK had remained in the Union. The UK will also participate in the surplus exercise with respect to 2020. In the second phase of negotiations, some simplification of the revenue adjustment procedure including time limitation could be agreed between the UK and the Union."

Juncker stressed: "We still have a lot of work to do... but today I note that we are moving to the second stage in these challenging negotiations."

Theresa May arrived in Brussels early this morning after a night of phone calls aimed at breaking the deadlock over the Irish border. During the conference, she stressed there would be no hard border in Ireland but that the economic and constitutional integrity of the UK would be maintained.

She said "getting to this point has required give and take on both sides" but said the agreed settlement is "fair to the British taxpayer." May added that getting to phase two of negotiations would give certainty to businesses.

Juncker's chief of staff Martin Selmayr had pre-empted what they are expected to say by tweeting a picture of white smoke - an allusion to decisions being made after a comment by his European Commission colleague yesterday.

Negotiations with the DUP stretched throughout the night as May sought to broker an agreement after a deal was scuppered earlier this week. A press conference is expected before 7am London time.

Arlene Foster told Sky News this morning that "six substantive changes" had been made to the original document that she and her MPs rejected on Monday.

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