Europe Economy

Britain, EU agree new draft Brexit text: EU official

Key Points
  • The U.K. has also reportedly confirmed that a draft agreement has been reached in Brussels over a Brexit withdrawal agreement.
  • The U.K. cabinet has said it will meet at 2.p.m. London time tomorrow to consider the agreement.
  • Sterling has risen back above $1.30.
BRUSSELS, BELGIUM - OCTOBER 18: British Prime Minister Theresa May prepares to speak to the media as she arrives for the October summit of European Union leaders on October 18, 2018 in Brussels, Belgium. 
Sean Gallup | Getty Images News | Getty Images

British and EU negotiators have agreed a draft text of a Brexit accord that has been sent to Prime Minister Theresa May for political endorsement, a senior EU official told Reuters on Tuesday.

"There is a common understanding on texts," the official said. A second official said that national envoys from the 27 member states would be briefed on the negotiations at 3 p.m. (1400 GMT) on Wednesday -- the same time as May will brief her fractious cabinet on the potential deal.

A month ago, the negotiators completed a draft text which was rejected by the British government. Since then, the two sides have been trying to find ways to overcome London's objections to Brussels proposals on the Irish border.

Meanwhile, the European Commission said on Tuesday it intended to adopt by the end of December all the legislation necessary to prepare the EU for a British exit without a divorce agreement should it be necessary by Brexit day on March 29.

The EU executive is in charge of negotiating a departure agreement with Britain on behalf of the 27 countries remaining in the EU after Britain leaves.

As Britain's exit date comes closer and negotiations on the withdrawal treaty have not yet been fully completed, the Commission issued a document on Tuesday on the preparations the EU would have to take in case a divorce agreement could not be reached.

"The draft Withdrawal Agreement constitutes the best option for the withdrawal. In the absence of a Withdrawal Agreement, the European Union will act to protect its interests, and should display a united and coordinated approach in all areas," the Commission said.

In London, the BBC said the EU and Britain had agreed a draft Brexit divorce deal text and Prime Minister Theresa May would present the agreement to her senior ministers on Wednesday. Any deal has to be approved by parliament.

The Commission said it intended to propose all necessary legislative measures and adopt all the legal acts required for preparing the EU for Britain crashing out without a divorce deal before Dec 31.

It said this deadline would give the European Parliament and EU governments the time needed to complete the procedures in time for Brexit day.

The Commission said the time needed for these procedure could not be contracted because EU treaties provided for an eight-week period for the consultation of national parliaments while some legal acts were subject to mandatory scrutiny by the European Parliament and governments.

It said the risks of financial instability in the event of a no-deal Brexit have "diminished significantly" due to ongoing contingency preparations, though such a scenario could still pose risks for cleared derivatives.

Announcing its latest contingency plans for a no-deal Brexit, the EU's executive said it was looking at temporary bridging solutions to mitigate disruption in key areas.

On air traffic, the Commission said it would propose extending current rules to allow UK airlines to land in EU territory and take off from its airports, but that this was conditional on Britain applying equivalent measures for carriers from the bloc.

For road transport, however, the Commission said its unilateral contingency measures "would allow for considerably less traffic than what currently takes place between the Union and the United Kingdom".