- The announcement came after a meeting between the 27 European ambassadors, in Brussels, where they signed off on a third delay.
- Nonetheless, the European Union is set to exclude any future renegotiation on the U.K.'s departure.
The European Union has agreed to give the U.K. three more months to exit the bloc.
European Council President Donald Tusk, who chaired the talks among the 27 European governments, announced the decision Monday on Twitter: "The EU27 has agreed that it will accept the U.K.'s request for a Brexit flextension until 31 January 2020. The decision is expected to be formalised through a written procedure."
This means that the U.K. will be able to leave the EU at any point before Jan. 31, provided that its Parliament approves the exit agreement that Prime Minister Boris Johnson concluded with the 27 other EU leaders earlier this month.
Tusk's announcement came after a meeting between the 27 European ambassadors in Brussels, where they signed off on a third delay.
A draft document prepared ahead of that meeting, signed Sunday and seen by CNBC, said: "With a view to allowing for the finalisation of all steps necessary for the ratification of the Withdrawal Agreement, including the obtaining of the consent of the European Parliament, the European Council agrees to a further extension."
"It notes that the Withdrawal Agreement will enter into force on the first day of the month following the completion of the ratification procedures by the Parties during this period, which ends at the latest on 31 January 2020."
The U.K. asked the EU earlier this month to be given until Jan. 31 to leave the bloc. A few days later, the U.K. Parliament voted in favor of Johnson's revised withdrawal agreement but said once again that it needed more time to approve all the necessary legislation.
The U.K. had been scheduled to leave the EU on Thursday – after being granted two previous Brexit extensions.
Sterling was trading about 0.1% up against the dollar in the early trading hours of Europe.
Nonetheless, the European Union is set to exclude any future renegotiation on the U.K.'s departure.
"The European Council firmly states that it excludes any reopening of the Withdrawal Agreement in the future and recalls that any unilateral commitment, statement or other act by the United Kingdom should be compatible with the letter and the spirit of the Withdrawal Agreement, and must not hamper its implementation," the document said.
The 27 European countries had concluded with the U.K. government last year a deal stating how the latter should leave the EU — the Withdrawal Agreement. However, the U.K. government, under the leadership of Theresa May, failed to get it ratified by the U.K. Parliament due to the Irish backstop — an insurance policy that would be implemented if the EU and the U.K. were not to sign a trade deal in the coming years and would divide Northern Ireland from the rest of Britain in terms of customs territory.
The EU ended up revising that agreement with Johnson's new government.
According to the draft document, the EU is set to remind the U.K. that for as long as it remains a member of the bloc, it has the "obligation" to suggest a commissioner to be based in Brussels.
Less time for trade talks
Another extension means that the U.K. and the EU will have less time to negotiate a trade deal.
Once the U.K. leaves the EU, under the ratified deal, there will be a transition period until the end of 2020, which could be extended until the end of 2022. The longer the U.K. takes to leave the EU, the shorter this transition period will be. During the transition period, both sides will look to negotiate a trade agreement.