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Dec. 8, 2017, 3:16 a.m. EST

Breakthrough on Brexit terms opens way to next phase of talks

Overnight deal on Irish border allows Juncker to say “sufficient progress” has been made

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By Karen Friar, MarketWatch


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Theresa May is welcomed by Jean-Claude Juncker in Brussels on Friday.

The U.K. and the European Union have reached agreement on the terms of the Brexit divorce, clearing the way to move on to the second phase of trade and transition negotiations.

Jean-Claude Juncker, president of the European Commission, said in a press conference early Friday morning that sufficient progress had been made for the talks to move forward. The Brussels negotiating team is now formally recommending that EU leaders agree to the advance to the second stage at their meeting next week.

“I believe we have now made the breakthrough we needed,” Juncker said.

The U.K. pound /zigman2/quotes/210561263/realtime/sampled GBPUSD -0.2545%  jumped to an intraday high of $1.3521 after the deal was announced, but has since slipped back to $1.3510. Sterling traded at $1.3475 late Thursday in New York. Against the euro, the pound /zigman2/quotes/210561278/realtime/sampled GBPEUR -0.1161% rose to €1.1501, trading around the highest level in six months and up from €1.1445 on Thursday.

The announcement came after a night of horse-trading for British Prime Minister Theresa May, who needed to resolve one final issue — the Irish border — to satisfy EU negotiators. The question of whether to have a “hard” or “soft” border between Northern Ireland and the Republic of Ireland had already scuttled a potential deal on Monday.

But on Friday, May indicated that obstacle had been removed overnight, allowing the Brexit process to advance.

“There will be no hard border,” May said at the press conference in Brussels. But she added that the deal will continue to preserve the “integrity of the United Kingdom.”

The Irish Prime Minister Leo Varadkar and Arlene Foster, the leader of the Democratic Unionist Party, have no objections to the proposal on the Irish border put forward by May, the BBC reported. The DUP, which is propping up May’s Conservative government in parliament, is widely seen as having torpedoed the last deal.

“Getting to this point has required give and take on both sides,” said May at the press conference in Brussels.

In addition to avoiding a hard Irish border with checks and controls, the British government also had to satisfy EU negotiators over the protection of the rights of EU citizens in the U.K. and the financial settlement, or “divorce bill.” Progress was made on these and other separation issues, the EU said in its report .

Leaders of the other 27 members of the EU will assess the progress made when the European Council meets Dec. 14-15 in Brussels. If they give the green light, the next phase of Brexit talks could start within weeks, media reports said.

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Karen Friar is a news editor based in London. You can follow her on Twitter @Karen_Friar.

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