British businesses will be able to trade freely with Iceland and Norway if the UK leaves the European Union without a deal under a new agreement announced by Liam Fox.

The International Trade Secretary said the agreement, which is subject to final checks before it is expected to be signed next week, was a “major milestone” in the Brexit preparations.

It will replicate the existing European Economic Area agreement (EEA) as far as possible, the Department for International Trade said.

BREAKING: Our negotiators have just initialled a trade agreement with Iceland & Norway for the European Economic Area. This is the 2nd biggest agreement we're rolling over and trade with EEA is worth nearly £30bn. This is on top of the agreement we’ve signed with Liechtenstein. — Dr Liam Fox MP (@LiamFox) March 18, 2019

Dr Fox said: “We have just reached agreement with Iceland and Norway to ensure continued access for British businesses to the European Economic Area should we leave the EU without a deal.

“This is one of the largest trade agreements we are party to as a result of our membership of the EU.

“Combined with the agreement we have already signed with Liechtenstein and Switzerland, it accounts for close to half of the trade we’re seeking continuity for.

“This is good news for British businesses and a major milestone in getting the UK ready for Brexit, no matter the terms of our withdrawal.

“I expect to formally sign this agreement shortly and others to follow soon after.”