United Kingdom and European Union agree on terms for Brexit

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The party said the government and European Union have already committed to having both "no hard border" on the island of Ireland, or any "borders or barriers to trade within the UK".

Davis said worldwide agreements would continue to apply to Britain now and during the transition period after Brexit takes place in 2019.

- The latest update includes a direct reference that Britain can "negotiate, sign and ratify global agreements" on its own during the transition period.

If they accept the document then it means the Brexit negotiations can move on to the most important, and most tricky, phase; agreeing on a long-term trade deal - but both sides now have much more breathing room to get it done, as it doesn't have to be agreed until the end of 2020.

However, "the transitional period will only come after everything is agreed", said Barnier.

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The dispute with Ireland had threatened to derail May's hopes of a formal political endorsement of the transition deal by European Union leaders when they meet in Brussels on Friday.

"Nevertheless, it will preserve the benefits, the advantages of the single market and the customs union... and will therefore be required to respect all the European rules just like all member states do". "Businesses need not delay investment decisions, or rush through contingency plans based on guesses about the future deal", Davis said.

Britain agreed to a contentious "backstop solution" which would keep Northern Ireland signed up to European Union rules in order to avoid a hard border with the Irish Republic, said the deal.

A spokesman for Taoiseach Leo Varadkar said Britain's commitment to a "backstop" solution to avoid a hard post-Brexit border is legally firm and will apply until something better is agreed.

All sides are united in their desire to create a frictionless border after Brexit and the issue is expected to dominate talks next week.

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The EU insists that any divorce deal must ensure there is no "hard border" between EU member Ireland and Northern Ireland, saying it could compromise the 1998 peace accord that ended decades of sectarian violence in the British province.

The idea was also deemed "unacceptable" by the pro-British party in Northern Ireland that props up her government.

Markets rallied after the announcement, The Financial Times reported, "with sterling climbing above $1.40 against the dollar to reach its highest level in three weeks".

The bloc says May has already agreed to it in principle last December, despite expressing outrage more recently as the bloc translated the earlier deal into "operational detail" that added up to having Northern Ireland de facto stay in the bloc's customs union.

London and Brussels had already drawn closer in recent days over the poisoning of a Russian ex-spy, with European Union foreign ministers on Monday offering "unqualified solidarity" over the attempted murder of Sergei Skripal.

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