EU's Tusk says Brexit declaration agreed with UK

British and EU flags are seen before Britain's Prime Minister Theresa May meets with Commission President Jean Claude Juncker to discuss draft agreements on Brexit at the EC headquarters in Brussels

The pound leapt by about one per cent against the dollar and also firmed against the euro on the news, which allayed fears Britain could leave the European Union next March with no new arrangements in place.

May also underscored the cooperation that has led to a preliminary agreement on memorandums of understanding on a set of issues of particular concern to the communities that live in and around Gibraltar, including taxation and cross-border workers.

The draft declaration was agreed in principle today, after negotiators worked through the night.

Downing Street has repeatedly made clear that agreement is needed on the future framework - setting out aspirations in areas like trade and security co-operation and believed to run to a few dozen pages - in order to press ahead with the legally-binding withdrawal agreement.

"It is time to work for a better deal".

She said the alternative to the agreement was either "more uncertainty, more division or it could risk no Brexit at all".

And Scotland's pro-independence leader Nicola Sturgeon, who heads the Scottish National Party (SNP), held talks with Britain's opposition Labour Party leader Jeremy Corbyn about voting down May's "bad deal" and figuring out what to do instead.

Meanwhile, the EU's two most powerful countries, Germany and France, are divided over the Sunday summit.

In such an event, Mr Varadkar said negotiating teams would have to try to come up with "some agreement around regulations and customs to avoid a hard border".

According to a leaked draft Brexit document, as cited by Bloomberg, EU-UK is said to commit to build on "single customs territory".

This is meant to avoid new border checks between British Northern Ireland and the Republic of Ireland, an European Union member, after a transition period ends in December 2020.

This is technically correct, but that's because the withdrawal agreement is not created to address our future trade relationship with the EU (which could involve a customs union).

Britain officially leaves the 28-nation European Union - the first country to ever do so - on March 29.

Spain has raised a last-minute obstacle for Mrs May by vowing to "veto Brexit" over the issue of Gibraltar, with Madrid demanding a written United Kingdom promise on the peninsula, known as The Rock, before Sunday's summit.

May was due to host Austrian Chancellor Sebastian Kurz, current holder of the rotating European Union presidency, for talks at Downing Street.

The prime minister faces pressure from her Northern Irish allies, who oppose a deal they say weakens British sovereignty in their province, and from Spain, which has warned it might oppose the accord over Gibraltar.

Mrs May spoke with her Spanish counterpart Pedro Sanchez on Wednesday evening to try and deal with the situation.

He repeated his threat that Spain will vote against the planned agreement unless its interests are taken into account. "We recognize that and there is absolutely no need for us to be vetoed into being brought to the table".

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