Negotiators finalized the accord, which will complete Britain’s separation from the bloc, on Christmas Eve, days before the country is due to leave the bloc’s single market and customs union.

The agreement will allow for tariff and quota-free trade in goods after Dec. 31, but that won’t apply to the services industry — about 80% of the U.K. economy — or the financial services sector.

Firms exporting goods will also face a race to prepare for the return of customs and border checks at the year-end amid warnings of disruption at Britain’s ports. The deal comes after three days of chaos at the main crossing between Britain and France offered a reminder of how quickly blockages at the border can choke international trade.

More than five turbulent years after a general election set off a chain reaction that would transform British politics and the country’s connections to the rest of Europe, the deal establishes a new framework for businesses on both sides of the Channel and frees the British Parliament from many of the constraints imposed by EU membership.

For Boris Johnson, the architect of Brexit and the third prime minister since the 2016 vote to leave the EU, it marks another landmark just over 12 months after he claimed a decisive mandate from voters with the promise to “get Brexit done.”

With the electorate divided, public finances battered by the Covid-19 pandemic, and Scots pushing for a split from the rest of the U.K., the prime minister’s next challenge is to prove that the U.K. can flourish outside the EU’s single market and customs union, a status that puts it behind other non-members such as Norway and Switzerland when it comes to EU access.

Businesses will still face border checks for which surveys have shown that they are unprepared, and consumers in Northern Ireland face the prospect of shortages of some goods as firms adjust to the new paperwork.

In a worst-case scenario, Johnson’s government itself has warned of a 7,000-long line of trucks, enough to stretch from the Port of Dover to the Palace of Westminster.

The U.K. got a taste of the potential chaos this week after France closed its border in response to an outbreak of a new strain of the coronavirus in Britain, leaving hundreds of lorries bound for the port of Dover backed up on local roads. To mitigate the risk, the government has built lorry parks and drivers entering Kent will require a permit or risk a fine.

Read More: Isolated U.K. Seeks to Reopen Trade Route After Days of Chaos

Outside the EU’s single market, U.K. financial services firms will be deprived of the passport that allows them to offer their services across the bloc and face a wait to see if the EU will grant them access — something that is still far from certain and, even if granted, could be withdrawn at any time.

That has allowed Dublin, Frankfurt, Amsterdam and Paris to start chipping away at London’s dominance as Europe’s financial center. Firms from JPMorgan Chase & Co. to Goldman Sachs Group Inc. are among the companies that have already shifted about 7,500 employees and $1.6 trillion of assets out of the U.K. because of Brexit.

The deal mitigates some of the immediate economic costs of leaving the EU, even if Britain’s long-term growth is set to be stunted. A no-deal Brexit would have cut 1.5% off U.K. gross domestic product in 2021, according to Bloomberg Economics. But growth is still forecast to be 0.5 percentage points lower every year for the next decade than what it would have been had Britain stayed in the bloc.

Against the dollar, the pound is still trading below its level before the Brexit vote. The U.K.’s benchmark FTSE 100 index is one of the worst-performing Western European benchmarks this year.

For the EU, reaching a deal avoids poisoning relations with a key diplomatic and commercial neighbor for years, and provides a basis for further cooperation in future.

Unlike other similar trade deals, the agreement will establish frameworks for common standards in aviation, business subsidies, labor rights and the environment, as well as law enforcement.

The agreement’s wide scope made negotiating it all the more complicated: Britain resisted EU calls to align its rules on business subsidies with those of the bloc, while France pushed for continued access to British fishing waters.

With the two sides at loggerheads on those two issues — and any wider agreement impossible until they were resolved — the negotiations quickly became bogged down.

After the coronavirus stopped the negotiators from meeting in person, Johnson refused to extend the post-Brexit transition period beyond the year-end. That put the squeeze on the teams, with officials working around the clock as multiple deadlines were missed. At one stage in October, the prime minister threatened to walk out without a deal.

Now that he has one, Johnson faces the challenge of governing without the Brussels bogeyman to blame for setbacks, knowing that he and his Conservative party will be judged on how the country fares as an independent nation.

(Adds context in second paragraph.)

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©2020 Bloomberg L.P.

Four years and six months on from the referendum that defined an era of British politics, the U.K. and European Union have agreed to a historic new trade deal on Thursday to define their relationship after Brexit.

The U.K. will complete its final exit from the 27-member bloc on Jan. 1. A no-deal Brexit could have caused a market shock, hurting some investors and impacting both U.K. and European consumers and companies.

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“We have finally found an agreement. It was a long and winding road, but we have got a good deal to show for it,” European Commission President Ursula von der Leyen said.

British Prime Minister Boris Johnson said that the U.K. “will be your friend, your ally, your supporter, and indeed never let it be forgotten, your number one market.”

He added that the deal, which comes into force on January 1, was the biggest trade deal signed by either side, covering trade worth £668bn in 2019 and guaranteeing tariff-free trade on most goods. Johnson said the deal will allow U.K. companies “to do even more business with our European friends.”

A key sticking point of the negotiations had been EU fishing rights in U.K. waters, but Johnson said that Britain will have “full control” of its waters for the first time since 1973.

Essential reading: A Brexit Trade Deal Has Finally Been Struck. Here’s What It Means for Markets and Investors.

The announcement on Thursday afternoon came later than expected, after what Ireland’s foreign minister Simon Coveney said was a “last-minute hitch” relating to language over fishing rights.

Johnson and von der Leyen had been in close contact over the past three days in a bid to strike a deal in time for ratification before the end of the year deadline.

   Von der Leyen said that “competition in our single market will be fair, and remain so. The EU rules and standards will be respected. We have effective tools to react if fair competition is distorted and impacts our trade.”

   The U.K. left the EU on Jan. 31 but the two sides had to reach a deal over their future trading relationship before the transition period ends at the end of this year. A post-Brexit deal drew a line under nine months of protracted negotiations and multiple missed deadlines. EU member states will now have to ratify around 2,000 pages of legal text. 

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LONDON — With just days until the deadline, the United Kingdom and European Union agreed to a post-Brexit trade deal Thursday, signaling the end of a four-year saga that engulfed British politics and exposed a deep cultural divide that shows no signs of healing.

European Commission Speech Brussels, 24 Dec 2020 Thank you Madam President, Dear Ursula,
 
The clock is no longer ticking.
After four years of collective effort and EU unity.

To preserve peace and stabil…

The announcement that the negotiators have reached an agreement is a major step forward to establish a close relationship between the EU and the UK.

We thank the President of the Commission Ursula von der Leyen and Chief Negotiator Michel Barnier for their tireless efforts.

Charles Michel, President of the European Council:

“For our citizens and businesses a comprehensive agreement with our neighbour, friend and ally is the best outcome. Over the past years the EU has shown unity and determination in its negotiations with the UK. We will continue to uphold the same unity.”

“These have been very challenging negotiations but the process is not over. Now is the time for the Council and the European Parliament to analyse the agreement reached at negotiators’ level, before they give their green lights.”

LONDON — A timeline of key events related to Britain’s decision to leave the European Union:

Jan. 23, 2013: British Prime Minister David Cameron promises a referendum on Britain’s membership in the EU if the Conservative Party wins the next general election. He does so to try to garner support among euroskeptics within his own party.

May. 7, 2015: British voters elect a majority Conservative government. Cameron confirms in his victory speech that there will be an “in/out” referendum on European Union membership.

Feb. 20, 2016: Cameron announces that he has negotiated a deal with EU leaders that gives Britain “special status.” He confirms that he will campaign for Britain to remain in the 28-nation bloc. The referendum date is set for June.

Feb. 21: Cameron is struck with a severe blow when one of his closest Conservative allies, the media-savvy Boris Johnson, joins the “leave” campaign.

June 16: One week before the referendum, Labour Party lawmaker and “remain” campaigner Jo Cox is killed by extremist Thomas Mair, who shouted “Britain First” before shooting and stabbing her.

June 23: Britain votes 52% to 48% to leave the European Union.

June 24: Cameron says he will resign in light of the results because Britain needs “fresh leadership” to take the country in a new direction.

July 13: Following a Conservative Party leadership contest, Home Secretary Theresa May becomes prime minister.

March 29, 2017: The British government formally triggers Article 50 of the EU’s Lisbon Treaty, setting in motion a two-year process for Britain to leave the bloc on March 29, 2019.

June 8: A general election called by May to bolster her party’s representation in Parliament to help with the Brexit negotiations backfires. Her Conservative Party loses its majority and continues in a weakened state as a minority government.

<

p id=”ap_link_Brexit_Brexit“>July 7, 2018: May and her Cabinet endorse the so-called “Chequers Plan” worked out at a fractious session at the prime minister’s country retreat. The plan leads to the resignations of Brexit Secretary David Davis, Foreign Secretary Boris Johnson and others who favor a more definitive break with EU.

Nov. 25: EU leaders approve a withdrawal deal reached with Britain after months of difficult negotiations. May urges the British Parliament to back the agreement.

Dec. 10: May delays the planned Brexit vote in Parliament one day before it is set to be held because it faces certain defeat. She seeks further concessions from the EU.

Dec. 12: Conservative lawmakers who back a clean break from the EU trigger a no-confidence vote in May over her handling of Brexit. She wins by 200 votes to 117, making her safe from another such challenge for a year.

Jan. 15, 2019: The Brexit deal comes back to Parliament, where it is overwhelmingly defeated on a 432-202 vote. The House of Commons will end up rejecting May’s agreement three times.

March 21 EU agrees to extended the Brexit deadline, just over a week before Britain’s scheduled departure on March 29

April 11: Britain and the EU agree for a second time to extend the withdrawal deadline to keep Brexit from happening without a deal in place. The new deadline is Oct. 31.

June 7: May steps down as Conservative Party leader over the stalled Brexit agreement.

July 23: Boris Johnson elected new Conservative Party leader

July 24: Johnson takes office as prime minister, insisting the U.K. with leave the EU on Oct. 31, with or without a deal.

Aug. 28: Johnson says he will temporarily shut down Parliament until mid-October, giving opponents less time to thwart a no-deal Brexit.

Sept. 3: Rebel Conservative Party lawmakers vote against the government in protest of Johnson’s strategy. They are expelled from the party.

Sept. 5: Johnson asserts he would rather be “dead in a ditch” than ask for another Brexit extension.

Sept. 9: A parliamentary measure that prevents the U.K. from leaving the EU without a deal becomes law.

Sept. 24: U.K. Supreme Court rules government’s suspension of Parliament was unlawful.

Oct. 10: Johnson and Irish leader Leo Varadkar meet and announce “pathway to a possible deal.″

Oct. 17: U.K. and EU announce they’ve struck a deal after the .K. makes concessions over Northern Ireland.

Oct. 19: Parliament sits on a Saturday and demands to see legislation before approving the deal.

Oct. 22: Johnson puts Brexit legislation on pause .

Oct. 28: Johnson asks the EU to delay Brexit again. The new deadline is Jan. 31.

Oct. 29 Parliament votes for a national election at the request of Johnson’, who hopes it will break the Brexit stalemate.

Dec. 12: Johnson wins a large majority in the general election, giving him the power to push through Brexit legislation.

Jan. 23, 2020: EU Withdrawal Bill becomes law.

Jan. 29: European Parliament approves the Brexit divorce deal.

Jan. 31: U.K. officially leaves the EU at 11 p.m., entering an 11-month transition period put in place for the two sides to negotiate a deal on their future relations.

Dec. 7: After months of U.K.-EU negotiations, Johnson and European Commission President Ursula von der Leyen say significant differences still stand in the way of a free trade deal.

Dec. 9 Johnson and von der Leyen hold a dinner meeting in Brussels to see whether the differences can be bridged. They don’t make a breakthrough but announce negotiations will continue for four more days, setting a Dec. 13 deadline for a final deal or no-deal decision.

Dec, 13: Von der Leyen and Johnson say negotiations will continue, vowing to go the “extra mile” to get a deal.

Dec, 24: The U.K. and EU announce they have struck a provisional agreement, just over a week before the year-end deadline.

———

Follow AP’s full coverage of Brexit and British politics at: https://apnews.com/hub/Brexit

More than 1,600 days after the United Kingdom voted to leave the European Union, a final trade deal has been agreed to that will avoid border and economic chaos on New Year’s Day.

The deal brings an end to a four-year divorce period since the 2016 Brexit referendum, and signals the end of the UK’s membership of the European bloc it had been a part of since 1973.

The 500-page agreement will mean there are no quotas or tariffs on the goods trade than makes up half of the annual commerce between the UK and EU, worth more than $1 trillion.

European Commission President Ursula von der Leyen told a press conference in Brussels the deal was “fair” and “balanced”.

“It was a long and winding road,” she said.

“But we have got a good deal to show for it.

“It is fair, it is a balanced deal, and it is the right and responsible thing to do for both sides.”

British Prime Minister Boris Johnson tweeted a picture of himself inside Downing Street, raising both arms in a thumbs-up gesture of triumph, with the words “The deal is done”.

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“We have taken back control of our destiny,” he said during a press conference at Downing Street.

“People said it was impossible, but we have taken back control.

“We will be an independent coastal state.

“We will be able to decide how and where to stimulate new jobs.”

Deal delayed to the very end

A deal had seemed imminent for almost a day, until haggling over just how much fish EU boats should be able to catch in British waters delayed the announcement of one of the most important trade deals in recent European history.

Although the UK officially left the EU on January 31 this year, it has been in a transition period to negotiate a free trade deal for when Britain leaves the EU’s single market and customs union at midnight on December 31.

The 11-month transition period was to allow for negotiations on a free trade deal with the EU and its 27 member nations.

On Thursday afternoon, just a week out from the deadline, an agreement was finally reached on how future trade will look between Britain and its largest economic partner.

The UK parliament will be recalled on December 30 to vote on the deal, which will likely pass with support from the opposition Labour party, while EU ambassadors from all 27 member states will meet on Christmas Day to review it.

Mr Johnson could still face a backlash from members of his own Conservative Party, with MPs from the Euro-skeptic European Research Group likely to closely examine the deal and take issue with any perceived concessions from the UK side on disputed areas such as fishing rights and business competition.

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p class=”_1HzXw”>More to come.