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The bilateral agreement was announced by London and Brussels after MPs emphatically rejected Theresa May’s Brexit deal, which officials say has dramatically increased the possibility of a no-deal divorce. Jean-Claude Juncker, the EU Commission president, has warned member states to increase their no-deal preparations because “time is almost up” and the withdrawal agreement is no closer to being completed. Germany, France and the Netherlands have all stepped up their own contingency planning in the wake of the vote.

The UK’s ambassador in Brussels, Alison Rose, announced the deal that allows British citizens to continue living and working in Belgium “whether the UK leaves the EU with or without a deal”. Didier Reynders, the deputy Belgian prime minister, insisted securing citizens’ rights is a “priority” for both Britons living in Belgium and Belgians across the Channel in Britain. The move was praised by Guy Verhofstadt, the EU Parliament’s Brexit co-ordinator, who said MEPs would continue to push for the no-deal plan to become “an EU-wide initiative”. He said: “I welcome the steps taken by the government of Belgium to secure the rights of UK citizens, even in an irresponsible no-deal Brexit.

Brexit news: UK agrees no-deal agreement with Belgium to protect citizens' rights

“The EU Parliament will continue to push for this to be an EU-wide initiative.” British citizens will be allowed to continue to live and work in the Netherlands after a similar deal was reached with the Government. The Dutch immigration service said Britons will have 15 months to apply for a residence permit, which will cost £50. Around 1.3 million British nationals currently live abroad in the EU and risk losing their rights if Britain leaves the bloc without a deal.

Germany and Italy have also signed the UK signed reciprocal agreements and France is willing to make a similar offer. Michel Barnier, the EU’s chief negotiator, has warned that any no-deal preparations will not replace the benefits of a completed withdrawal agreement. He said: “If there is no deal there will be contingency measures. “But that will be very difficult and will not be done in a climate of confidence. The best guarantee is reaching an agreement.”