Speaking in Brussels on Monday, the EU's chief negotiator, Michel Barnier, commented that Britain and the EU have agreed terms for a 21-month transition after Brexit (easing fears that of a cliff-edge exit next year), noting that the deal was a "decisive step."
As The FT reports, the deal represents one of the the most valuable economic guarantees secured by the UK since Brexit talks began.
“We were able to agree this morning…on a large part of what will make up an international agreement for the ordered withdrawal of the UK... We’ve reached an agreement on the transition period,” said Mr Barnier.
Under the time limited period, the UK will have to abide by all existing EU rules but will lose its say in the decision-making process.
As Bloomberg reports, UK Brexit secretary David Davis' tone is bullish:
On the transition agreement: “It’s December 20, and yes it’s 21 months, which is near enough to the two years we asked for.”
Cable immediately spiked back above 1.40 on the headlines...
Mr Barnier said he was confident the EU could agree on an “ambitious” framework for future UK-EU foreign and security policy during the transition period.
“The intention is to move as fast as possible as soon as on all aspects of the future relationship”, said Mr Barnier.
Additionally, on Ireland, the UK has agreed to include a “legal” backstop that would keep Northern Ireland in key parts of the single market and the EU’s customs union. Davis commented:
“While there’s no agreement on the right operational approach, we know what we need to do and we are going to get on with it,” he says.
But, we note that Citi warns that longer-term, Ireland still remains an obvious problem but is not a barrier to today's progress. The ‘backstop’ agreement for the Irish border is effectively the last resort if all else fails – this looks to be fairly imbalanced in favour of the EU, and the UK and Ireland will hope that it doesn't come to that. As usual, the can has been kicked down the road on this topic, but it is not totally relevant for today's implementation deal in any case.
Finally, as one may tell from our skeptical take on the comments above, even The BBC doesn't believe in Brexit Breakthrough...