Britain’s Brexit transition period in which it continues to follow all EU rules with no say in shaping them could be extended past the start of 2021, the European Council has said for the first time.

The European Union today confirmed that it wants the transition period – during which the UK will have to continue following EU law – to end on 31 December 2020.

During that one year and nine month period, the EU and the UK will negotiate a trade agreement about the UK’s future relationship with the bloc, with Britain going its own way at the end of the period.

But Ekaterina Zakharieva, the deputy prime minister of Bulgaria, which is currently chairing the European Council, said at a press conference in Brussels that there was “flexibility” in the length of the period.

Speaking alongside European Commission chief negotiator Michel Barnier the minister said if no trade agreement was agreed during the time, the period could be longer.

“What we agreed upon during the Council earlier today was … for a fixed specific cut-off date,” she told reporters.

“But, the negotiation directives and the declaration that was approved by the Council allow for the flexibility in terms of this period in case we didn’t manage to achieve progress on the negotiations for the future.

“What is of interest to both parties is to have a fixed specific date to the transition period. It cannot be an endless period.”

The clarification is significant because The Independent understands that UK officials are concerned the transition period deadline offered by the EU might not be long enough to prepare the country for exit and is considering asking for a longer time.

Despite the possibility of extension, the EU is keen that the transition does not continue indefinitely.

“It is in nobody’s interests, certainly not in the UK’s interests, to drag on, to extend that period of instability and uncertainty,” Mr Barnier said at the same press conference.

“We’re working on an orderly withdrawal, there’ll be an agreement founded on the joint report and all of that is intended to inject stability where the decision to leave the EU has created a lot of instability an uncertainty and concern and worry for EU citizens.”

Theresa May asked the EU for a transition period of “around two years” in her Florence speech in autumn 2017, but the EU’s offer is very much at the lower end of this envelope. Apart from negotiating a free trade agreement during the time, the UK would have to physically prepare for Brexit, including the possibility of an overhaul of its ports and borders for new customs checks.

Barnier: 'the single market cannot be a la carte'

The Prime Minister’s strategy has come under fire from Brexiteers in her own party, with MP Jacob Rees-Mogg saying he believes the transition period amounts to the UK becoming a “vassal state” of the EU, though Brexit Secretary David Davis has said it is a “bridge to the future” and only amounts to a “short period” in the EU’s orbit.

The European Union’s 27 remaining countries formally agreed on the terms of the transition period in two minutes flat at a meeting of the general affairs council in Brussels on Monday.

The UK did not attend the council meeting – as is convention for decisions regarding Brexit. The council is a gathering of all the relevant government ministers from the EU’s countries.

The pointed announcement that the discussion only took two minutes appears designed to show the EU’s unity – compared to that of the British government, which has faced criticism from its own backbenchers over plans for the transition period and which has yet to agree what sort of trade deal it wants.

The EU instructions to its negotiators, leaked draft copies of which have been obtained by The Independent, confirms that Britain would have to implement new EU laws created during the nearly two-year transition period without any say on their content.

Brussels is also demanding a veto over any trade deals the UK wishes to sign with other countries during the period, and will strip the UK of its representation in the European Council, European Parliament, and European Commission – which are being lost as a result of deciding to leave the bloc.

The guidelines state that during the transition period EU “acquis (law) should apply to and in the United Kingdom as if it were a Member State. Any changes to the Union acquis should automatically apply to and in the United Kingdom during the transition period”.

It adds that “the direct effect and primacy of Union law should be preserved” during the period, but that “as a general rule, the UK will not attend meetings of committees” shaping EU law.

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“During this limited period of time, the whole EU acquis will continue to apply to the UK, as well as the full EU supervision and enforcement framework under the jurisdiction of the European Court of Justice,” Mr Barnier said.

“This will include EU rules entering into force during the position, for one simple reason: during transition, the UK will continue to take part in the single market, to take part in the customs union, and all union policies. It will continue to have all the economic benefits. Therefore, it must also apply all EU rules. The single market cannot be a la carte.”