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A soft Brexit appeared to edge closer after Theresa May struck a last-minute deal to break the EU deadlock today.

The Prime Minister won backing to shift talks on to a future trade deal – but it came with a £39billion price tag , meaning the UK pays into the EU budget until the end of 2020, nearly two years after withdrawal.

There will be no hard border between Northern Ireland and the Republic, and the rights of three million EU citizens living here and 1.2 million British expats will be protected.

European Commission president Jean-Claude Juncker hailed it as a “breakthrough”.

The PM is expected to make a Commons statement on Monday.

The PM has conceeded on key red lines in the past 11 months hinting a softer exit could be on the cards.

Speaking at Lancaster House in January, the PM said: “We will take back control of our laws and bring an end to the jurisdiction of the European Court of Justice in Britain.”

Yet the court now has reach over Britain for another eight years after the UK leaves the bloc.

And the PM, who has consistently claimed that “no deal is better than a bad deal”, settled for a pact which is set to enrage Tory Brexiteers when they debate the plan on Monday.

(Image: AFP)

In the immediate aftermath of the dawn deal, two of the Cabinet’s key Brexiteers hailed the pact. Boris Johnson tweeted: “ Congratulations to PM for her determination in getting today’s deal .” Michael Gove claimed: “ The final whistle blew this morning and Theresa May won .”

Shadow Brexit Secretary Sir Keir Starmer said it was “encouraging”, but added: “Theresa May must seriously reflect on her approach to the negotiations so far.”

Tory Brexit rebel Anna Soubry said Mrs May “began to deliver” on her promise to put the economy “at the heart of any Brexit deal”.

(Image: AFP)

Meanwhile, Ex-UKIP leader Nigel Farage took a swipe at the PM, tweeting: “A deal in Brussels is good news for Mrs May as we can now move on to the next stage of humiliation.”

Northern Ireland’s Democratic Unionist Party , whose opposition led to talks collapsing, said there was still “more work to be done”.

A final border plan will only be hammered out in the next stage.

If a trade deal cannot be agreed, the UK will maintain “full alignment” with parts of the single market and customs union.

That would mean EU rules effectively reaching over all the UK indefinitely, cheering campaigners demanding a soft Brexit.

The dawn deal emerged in Brussels after four days of high drama and intense brinkmanship.

(Image: REUTERS)

Mrs May was locked in a frantic round of telephone diplomacy throughout Thursday night while the No10 staff Christmas bash was in full swing. At 7.30pm she held phone calls with Mr Juncker and Irish PM Leo Varadkar.

She then spoke with DUP leader Mrs Foster and they agreed its objections had been resolved. Her support finally allowed the PM to agree a pact.

Aides said Mrs May snatched “a couple of hours’ sleep” before departing for Brussels in the early hours. Her armoured Jaguar swept out of Downing Street at 3.45am for a blue-light dash through London’s dark, deserted streets, escorted by police outriders. Brexit Secretary David Davis and No10 chief Brexit adviser Olly Robbins were also in the convoy.

They flew out of RAF Northolt at 4.30am, touching down in Belgium an hour later.

The British trio arrived at the European Commission’s Berlaymont building at 5.54am for breakfast with Mr Juncker, his top aide Martin Selmayr and EU chief negotiator Michel Barnier.

At 6.06am Mr Selmayr confirmed the breakthrough, tweeting a picture of white smoke – echoing Vatican announcements of the election of a new pope.

Moments later, exhausted Mrs May and Mr Juncker appeared for a press conference where the PM admitted reaching a withdrawal deal “hasn’t been easy for either side”.

(Image: PA)

Mr Juncker said “sufficient progress” had been made so negotiations could now focus on the post-Brexit relationship.

However EU Council President Donald Tusk warned the “most difficult challenge is still ahead”, while Mr Barnier said Mrs May’s “red lines” meant Britain could secure only a free trade agreement based on the EU’s pact with Canada. He added: “That is closing certain doors, so that will be the model we’ll have to work on.”

But Mrs May’s spokesman insisted: “We believe we can get a very ambitious trade deal, that we are in a unique position in terms of our starting point and we are still confident of achieving that.”

The EU claims Britain will remain a “member” of the single market and customs union during a two-year transition. Mrs May had already accepted the UK would effectively stay signed up to single market rules during the two-year implementation after the UK quits on March 29, 2019.

While she tasted victory, Mrs May risked angering Tory Brexiteers with the size of the bill, potentially tying Britain to single market rules, and conceding the European Court of Justice would continue to oversee the rights of EU citizens for eight years after we quit.

(Image: Getty)

Former Cabinet Minister and Brexiteer David Jones warned the “full alignment” plan for a soft Irish border could stop Britain signing free trade deals with other countries.

Leave.EU campaign founder Arron Banks claimed was a “betrayal” by a “traitorous, lily-livered embarrassment of a Prime Minister”.

But Leave campaigner Theresa Villiers said: “If we are going to make a success of this process and leave on orderly terms with a good relationship with our European partners, I’m afraid compromise is inevitable.”

Ex-Chancellor George Osborne, now editor of the Evening Standard newspaper, said “hard Brexiteers” who wanted Britain to leave with no deal “have been thwarted”.

A No10 spokesman said the divorce bill was reached after a “forensic” examination of ­financial liabilities and added: “This is a fair settlement of our obligations.”

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It's a £39bn bill we need not pay

By Tim Martin, Chairman of JD Wetherspoon

The big failure of these talks has been the Government promising £39billion for the divorce bill. We shouldn’t pay it, full stop.

We have no legal obligation to pay money to the EU. We should use it for the NHS or social purposes, rather than sending it into Brussels.

If we want lower food prices in the UK, then leaving the EU in March 2019 without a deal is the right way to achieve it because the EU puts up high tariff barriers to non-EU food imports.

The spin that’s been put out is that we will revert to World Trade Organisation tariffs. But WTO rules would allow the UK to eliminate EU tariffs on food for non-EU countries.

You can’t just do it for non-EU countries, you must do it for the EU too. I don’t want a transitional deal where EU food tariffs apply.

I am pleased with the other key parts of the talks. It’s good that there has been progress on the Irish border and the reciprocal deal on the rights of UK and EU citizens.

We should focus on our new relationship

By Josh Hardie, CBI Deputy Director-General

The breakthrough in Brussels shows that where there’s a will, there’s a way.

Firms have been watching negotiations closely and this will lift spirits for Christmas.

It is now time to focus on the true prize of a new relationship and a deal that starts from 40 years of economic integration. With the willpower shown yesterday, and with jobs and living standards at the heart of every negotiating objective, the talks can set the UK up for the next 40 years of close alignment.

It must be unequivocal that EU citizens working here, and UK citizens abroad, are welcome, whatever the final deal.

On transition, concrete assurances will build confidence and help firms across the UK and Europe to pause their contingency planning.

Discussions will continue to be tough, but this progress shows that careless talk of walking away can be replaced by confidence that the UK can get a good deal.