BRUSSELS (Reuters) – The European Union agreed on Friday to move Brexit talks onto trade and a transition pact but some leaders cautioned that the final year of divorce negotiations before Britain’s exit could be fraught with peril.
EU leaders agreed in just 10 minutes that “sufficient progress” had been made after a deal on respective citizens’ rights, the Irish border and Britain’s outstanding payments, giving negotiators a mandate to move on to the main phase of talks.
“This is an important step on the road to delivering the smooth and orderly Brexit that people voted for in June of last year,” Prime Minister Theresa May said outside her home in Berkshire, southern England.
“There is still more to do but we’re well on the road to delivering a Brexit that will make Britain prosperous, strong and secure,” May said, adding that Britain would be leaving the EU on March 29, 2019.
Summit chair Donald Tusk said the world’s biggest trading bloc would start “exploratory contacts” with Britain on what London wants in a future trade relationship, as well as starting discussion on the immediate post-Brexit transition.
A transition period is crucial for investors and businesses who fear that a “cliff-edge” Brexit would disrupt trade flows and sow chaos through financial markets.
The head of the EU executive, Jean-Claude Juncker, cast May as a “tough, smart, polite and friendly negotiator”. Officials said they understood the pressures on the prime minister, who leads a minority government and a deeply divided country.
NOW FOR THE HARD PART
While there was a sigh of relief that Brexit talks can move forward, EU leaders said talks on a future free trade pact will not begin until after March — a date underlined by “guidelines” that set out how to proceed as Britain seeks to unravel more than 40 years of membership.
The talks will be tough.
“We have made good progress, the second phase of talks can start,” German Chancellor Angela Merkel said. “But this will mean even tougher work – that was clear today in the discussion – than we have experienced so far.”
Sterling GBP=D3 reversed gains and fell 0.8 percent on the day to $1.3327.
Austrian Chancellor Christian Kern went further, saying even a primary school student could see that the “first phase” deal on the Irish border would come back to…