Brexit: EU leaders agree to move to second phase of talks

European Union leaders have agreed to start the next phase of Brexit negotiations on Friday, having given Prime Minister Theresa May's overnight speech a warm reception.

Donald Tusk, the president of the European Council has confirmed that EU leaders have given the green light to move on to the second phase of the Brexit talks.

The EU council confirmed the guidelines for framework trade talks will not be issued until March, with negotiations in January focusing on the transition period. The bloc wants the UK to provide more information about what sort of relationship it wants.

Talks could begin next week on the terms of a transition period after the UK leaves in March 2019, which European Commission President Jean-Claude Juncker warned would be a "significantly harder" process.

EU laws will continue to apply to the UK until end of the transition period, currently assumed to be 2021, with Britain continuing to participate in the customs union and the single market, maintaining the free movement of goods, capital, services, and labour - as well as being subject to the competence of the EU Court of Justice.

The pound sank on the news, falling 0.5% on the euro to 1.1347 and almost 0.4% on the dollar to 1.3382.

DIFFERING AIMS

May met other leaders the previous evening for a dinner in Brussels after she gave a speech urging her European counterparts to move on to second stage of the Brexit negotiations and try to shape a “deep and special” future relationship as soon as possible.

“I make no secret of wanting to move on to the next phase and to approaching it with ambition and creativity” said May.

“A particular priority should be agreement on the implementation period so that we can bring greater certainty to business in the UK and across the 27,” she added.

After her speech May was applauded by the other leaders in an act of support, which would be much welcomed by the PM coming two days after her first defeat in the House of Commons.

Although EU leaders only want to forge a “framework” for a trade deal before the 2019 Brexit deadline, which can be fleshed out with detailed negotiations during the two-year transition phase post Brexit, British ministers want a substantial agreement on trade before the Brexit date.

The EU leaders will have their own round of discussions as early as next week. They will have to prioritise translating the issues about citizens’ rights, the Irish border and the divorce bill into a binding legal withdrawal agreement and discussing a transition deal for when the UK finally leaves the EU.

European leaders have also warned Theresa May that the negotiations and trade deal would be suspended if the UK does not uphold last week’s agreement. They have also requested urgently an explanation of what the UK wants in the trade talks.

The Prime Minister’s spokesperson said that the discussion on the trade deal would be discussed by the Cabinet before Christmas.