ES News email The latest headlines in your inbox twice a day Monday - Friday plus breaking news updates Enter your email address Continue Please enter an email address Email address is invalid Fill out this field Email address is invalid You already have an account. Please log in Register with your social account or click here to log in I would like to receive lunchtime headlines Monday - Friday plus breaking news alerts, by email Update newsletter preferences

London business leaders welcomed today’s breakthrough but issued a stark warning that the deal with Brussels represents “the easy stuff” compared with the crucial negotiations still to come.

The pound surged 0.53 cents to $1.3479 after Theresa May and European Commission President Jean-Claude Juncker confirmed that “sufficient progress” had been made on the first phase of the divorce agreement.

Sterling initially slipped against the euro on news of a deal but then climbed to a six-month high rising to 1.1pc to over €1.15.

There was particular relief that the rights of three million EU citizens to remain in Britain had been clarified, but concern that those who have already left will not be lured back.

Catherine McGuinness, policy chairman of the City of London Corporation, said: “Christmas has come early for financial firms with the news that Brexit negotiations can now move to Phase 2.

“Government has made a bold but necessary step forward. But the hard work starts now.

“The UK’s future trading relationship with the EU will mark one of the most important pieces of legislation in a century – it is vital we get it right first time.”

Mike Cherry, national chairman of the Federation of Small Business, said: “Small firms with EU citizens in their workforce will be relieved to give their staff the certainty they need about the protection of their rights.

“As we leave the EU, businesses will need to continue to be able to find the workers and skills that they require, and today’s pledge is an encouraging sign of a sensible, pro-business attitude.”

But Sean McKee, policy director at the London Chamber of Commerce and Industry, said it was vital for the economy that the negotiating teams thrashed out a deal that does not impede trade with Europe in any way.

He said hauliers had been told that border checks at post such as Dover are likely to double from two minutes to four minutes “and that will lead to 17 miles of trucks snaking back through Kent.”

David Buik, market commentator at brokers Panmure Gordon, said: “The trade deal is going to be difficult to the Nth degree, Brussels are going to be stroppy all the way. It will be three years minimum and it’s going to be awful.”

Brian Bicknell, chief executive of London property group Shaftesbury, said: “With minimal progress after nine months it’s hard to be optimistic about the next year. Business desperately needs certainty.”