Brexit Deal: Trade talks to be recommended after major breakthrough in talks

In dramatic pre-dawn scenes, Mrs May and Brexit Secretary David Davis flew to Brussels to confirm with Mr Juncker the text of joint proposals on the key divorce issues of citizens' rights, the Irish border and Britain's exit bill.

The breakthrough was welcomed by business leaders, who had warned that companies would begin activating plans to move staff and activities abroad if no progress was made by Christmas. The pound rose on the announcement.

The final details of the paper were thrashed out in the early hours of Friday by Mrs May and Democratic Unionist Party leader Arlene Foster, who blocked a previous version of the agreement on Monday with her last-minute objection to provisions which she feared would create a customs border between Northern Ireland and the mainland.

Mrs Foster said that "substantial changes" to the text rejected on Monday would mean there was "no red line down the Irish Sea" and no "special status" for Northern Ireland.

The joint report agreed by Mrs May and Mr Juncker states, that in the absence of an overall trade deal, the UK will maintain "full alignment" with elements of the EU single market and customs union which support the economy of the island of Ireland and the Good Friday Agreement.

In a crucial passage, which appears to have been added to satisfy DUP concerns, it states that "no new regulatory barriers" will be allowed between Northern Ireland and the rest of the UK, and that the province's businesses will continue to have "unfettered access" to the UK internal market.

In a provision likely to spark concerns among some backers of Brexit, the document says that the European Court of Justice will continue to have a role in overseeing the rights of EU citizens in the UK for eight years after Brexit.

It does not provide a figure for the UK's "divorce bill" - expected to total up to £50 billion - but says that the UK will be required to continue contributions to the EU budget up to the end of 2020 "as if it had remained in the Union", and will be liable for its share of outstanding financial commitments and liabilities up to that date.

The financial settlement "will be drawn up and paid in euro".

In a Brussels press conference Mrs May said that the process of arriving at a withdrawal deal "hasn't been easy for either side", but said the agreement represented a "significant improvement" on the text she was preparing to sign off on Monday.

Provisions on citizens' rights would allow EU nationals in the UK "to go on living their lives as before", while the financial settlement would be "fair to the British taxpayer" and the agreement on Ireland would guarantee there would be "no hard border" between Northern Ireland and the Republic.

"I very much welcome the prospect of moving ahead to the next phase, to talk about trade and security and to discuss the positive and ambitious future relationship that is in all of our interests," said Mrs May.

Mr Juncker said that Brexit was a "sad" development, but added: "Now we must start looking to the future, a future in which the UK will remain a close friend and ally."

He and Mrs May shared "a joint vision of a deep and close partnership", he said.

European Council president Donald Tusk confirmed that he has sent the EU27 proposed guidelines for a new mandate for chief negotiator Michel Barnier to begin negotiations on the transition period, as well as "exploratory talks" on the future trade relationship.

He called for "more clarity" from the UK over its hopes for future trade relations.

Under his proposals, during the transition period of around two years after March 2019, the UK would be required to respect EU law - including any new laws which are passed by the EU27 without British involvement - and to observe its budgetary commitments and the judicial oversight of the ECJ.

"While being satisfied with today's agreement, which is obviously a personal success for Prime Minister Theresa May, let us remember that the most difficult challenge is still ahead," Mr Tusk said.

"We all know that breaking up is hard, but breaking up and building a new relation is much harder.

"Since the Brexit referendum, a year and a half has passed. So much time has been devoted to the easier part of the task, and now to negotiate the transition agreement and the framework for our future relationship we have de facto less than a year."

Taoiseach Leo Varadkar, who held telephone talks with Mrs May on Thursday as the details of the deal were hammered out, said it was a "significant day" for Ireland, which had "achieved all that we set out to achieve in phase one of these negotiations".

Leading Cabinet Brexiteer Michael Gove hailed the agreement as "a significant personal political achievement for the Prime Minister".

Mr Gove told BBC Radio 4's Today programme: "She got a deal in the interests of the whole of the UK, so the integrity of the UK is absolute and paramount."

Shadow Brexit secretary Sir Keir Starmer said the development was "encouraging", but added: "Theresa May must seriously reflect on her approach to the negotiations so far.

"We cannot have another year of chaos and confusion or the farcical scenes we saw earlier on in the week that put jobs and the economy at risk."

Ex-Ukip leader Nigel Farage said on Twitter: "A deal in Brussels is good news for Mrs May as we can now move on to the next stage of humiliation."

Foreign Secretary and Leave campaign figurehead Boris Johnson, who is on a trip to the Middle East, tweeted: "Congratulations to PM for her determination in getting today's deal.

"We now aim to forge a deep and special partnership with our European friends and allies while remaining true to the referendum result - taking back control of our laws, money and borders for the whole of the UK."