THE UK Government has agreed a number of concessions, including the continuation of free movement of people, to help secure a deal with Brussels that covers the 21-month implementation period following Brexit Day.

The prize for Britain is that it can now begin talks on a future trade deal, which will be triggered later this week when EU leaders are expected to ratify the transitional agreement.

However, some issues still need to be settled, most notably that of the Irish border.

Under the terms of the joint legal text agreed with Michel Barnier, the EU’s chief negotiator, the UK will keep the benefits of the single market and the customs union up to December 31 2020, although it will relinquish its role in any decision-making institutions.

One major gain is that Britain will be able to negotiate and ratify trade deals with outside countries following Brexit Day in March 2019, which will come into force once the transition period ends on December 31 2020.

Talks will continue on outstanding issues over the summer before a final text of the withdrawal is agreed in October and sent to the European and UK Parliaments for ratification.

The major concession is that during the transition period EU citizens arriving in the UK will have the same rights and guarantees as those who had arrived before Brexit Day.

This effectively means the freedom of movement will continue so that EU citizens will be able to claim residency rights until the end of 2020.

Theresa May had insisted that the rights offered to EU citizens during the 21-month period had to be different from those who had arrived before Britain formally left the EU. But Brussels stood its ground and won the concession from the Prime Minister, who acknowledged previously that the negotiations would involve “give and take”.

David Davis hailed the agreement as a "significant step". The Brexit Secretary told a joint press conference in the Belgian capital that the implementation period would give business the stability it had asked for.

"They now have certainty about the terms that will apply immediately after our withdrawal, meaning they can continue to operate and invest with confidence as the design of our future partnership with the European Union becomes clear.

"Now this is true across the whole United Kingdom family because the territorial scope of the withdrawal agreement makes clear it includes Gibraltar," stressed the Secretary of State.

Mr Barnier was also upbeat, describing the draft deal as a “decisive step,” which would “make up an international agreement for the ordered withdrawal of the UK”.

Financial markets welcomed the news, with sterling climbing above $1.40 against the dollar to reach its highest level in three weeks; the pound was trading up 0.7 per cent against the euro at 1.14 euros.

Mrs May said: "The message people can take from this is that prior to December people questioned whether we would get agreement then. We did. People questioned whether we would get agreement now. We have.

“What this shows is that with goodwill on both sides, working hard, we can get an arrangement for the future, which will be in the interests of the UK and in the interests of the European Union and it will be good for all parts of the UK."

However, the key outstanding issue remains the Irish border.

The European Commission's proposals for "backstop" arrangements remain in the new text despite being angrily rejected by the PM when first published last month.

Under the controversial arrangements - to be put in place if the UK fails to come forward with a better solution - Northern Ireland would continue to be considered "part of the customs territory of the Union", effectively creating a customs border along the Irish Sea.

When first proposed in February, Mrs May said "no UK prime minister could ever agree" to such a proposal.

Officials will now work feverishly to try to square the circle on the border issue before October’s deadline for a final agreement.