Britain will have to obey the EU rule-book in full during a transition period after Brexit while having no voice in decision-making bodies, under proposals agreed by the remaining 27 member states.

In a brief meeting in Brussels, the EU27 gave their approval to new guidelines for chief Brexit negotiator Michel Barnier, ahead of talks expected to conclude in March.

Speaking ahead of the publication of Mr Barnier’s new mandate, Downing Street acknowledged that “differences” remain between the views of London and Brussels on the nature of the transition, expected to last about two years from the official date of Brexit in March 2019.

In a statement released after the Brussels meeting, Bulgarian Deputy Prime Minister Ekaterina Zaharieva said: “EU ministers have given a clear mandate to the Commission on what is the type of transition period that we envisage: full EU acquis to be applied in the UK and no participation in the EU institutions and decision-making.

“The 27 adopted the text speedily today and we hope an agreement on this with the UK can also be closed swiftly.”

Countdown to Brexit: key events. (PA Graphics)
(PA Graphics)

Brexit Secretary David Davis said he expected the agreement on the implementation period would be concluded by March but told peers “it’s not guaranteed”.

Appearing before the European Union select committee, he dismissed reports transition could take three years.

“Twenty one months may be fine, plus or minus a few months is neither here nor there,” he said.

“But we are not talking about extending to three years. It isn’t necessary.”

Setting out where he expected the key clashes to come during the transition talks, Mr Davis told the committee: “There will be an argument about the right to negotiate free trade agreements.

“There will be an argument, I’m sure, about the issue of whether or not we can object to new laws that we haven’t had a say in.

“There will be discussions about issues like representation on technical committee.”

He said he also expected arguments over whether British institutions, companies and individuals can be excluded from EU projects during the transition period on security grounds.

Mr Davis said it was in the “common interest” of the UK, the EU and their trading partners for existing EU trade deals to continue to apply to Britain during the transition.

He added: “That’s not to say in the next few years we won’t get the odd scrap here or there, but generally speaking we think they are all soluble in the timetable.”

Once the transition period is over, he said he expected the UK to have to renegotiate trade deals with countries like South Korea which already have agreements with the EU.

The UK has not yet engaged with the Commission on its demand for a right to object to the imposition of new EU laws – such as  a possible “Robin Hood tax” on financial transactions – drawn up without British involvement, he said.

“We will start talking about that next week,” said Mr Davis. “We will face an objection against it, I’m sure.

“We take the view that it is not particularly good democratic practice to have your country accept without any say-so anything, and particularly if the EU takes it upon itself to do something which is actively disadvantageous to a major British industry, or something like that.”

Mr Davis said he expects agreement in Europe on the future relationship between Britain and the EU could take “some considerable time”.

The Belgian regional parliament of Wallonia put significant obstacles in the way of a trade deal between the EU and Canada.

“I’m planning my visit to the Walloon parliament already,” Mr Davis said.

Brexit Secretary David Davis gives evidence to the the European Union Select Committee in the House of Lords, London.
Brexit Secretary David Davis gives evidence to the the European Union Select Committee in the House of Lords, London

The Prime Minister is facing increasingly vocal complaints from Leavers in her own party that she is preparing to deliver a Brexit “in name only”.

To the consternation of Brexiteers, the Government has already indicated it is willing to comply with most of the EU’s demands to secure what ministers refer to as an “implementation period”.

Mr Davis said the government wanted an implementation period rather than an extension of membership to allow it to negotiate new trade deals.

He added: “It’s not exactly the same as membership but it is very, very similar.”

Downing Street declined to comment on reports that German Chancellor Angela Merkel had told reporters in a private meeting that whenever she asks Mrs May what she is seeking, the Prime Minister responds: “Make me an offer.”

Labour chairman of the Commons Exiting the EU committee Hilary Benn said it was “extraordinary and unacceptable” that the Government had so far failed to spell out exactly what it wants from Brexit negotiations.

He said: “We are now 19 months on from the referendum and neither Parliament nor the rest of EU are any the wiser about what the Government actually wants from the Brexit negotiations. Extraordinary and unacceptable.”

Mrs May met her Brexit “inner circle” of senior ministers including Boris Johnson, Michael Gove and Amber Rudd at Downing Street to discuss the UK’s approach to negotiations.

Brexit legislation will go before the House of Lords on Tuesday where it is set for a rocky ride.

Sir Vince Cable said he believes the Liberal Democrats can win enough support to get at least ten amendments through, including junking the exit day from the legislation through an “unholy alliance”.

The Lib Dem leader said: “The ending of the fixed date of exit is extremely important because you are now getting Remainers arguing this is ludicrous and is boxing the government into a very bad negotiating position, but you are even now getting the Rees-Moggs saying transition is a vassal state and it makes much more sense to postpone exit.

“I would have thought we are going to get a bit of an unholy alliance to stop an absolute hard date at the end of March.”