The government must be prepared to accept whatever terms the European Union offers to secure a quick Brexit transition agreement and reduce the uncertainty for UK firms, an influential MP has said.

Nicky Morgan, who chairs the Treasury Select Committee, said the consequences of not striking such a deal, which would maintain how the UK trades with the EU currently for a temporary period post-Brexit, would be "dramatic and damaging".

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The committee released a report outlining the need for a transition agreement that is "simple enough to negotiate within a matter of weeks".

It noted that many businesses had already begun planning for a "no-deal" Brexit, with several more set to follow early next year in potentially moving jobs and incurring unnecessary expenses.

The UK is set to leave the European Union in March 2019, with the two sides recently striking a deal on the first phase of negotiations over issues such as the rights of EU citizens in Britain and the border with Ireland.

"Speed is of the essence," Morgan said. "Delays to agreements caused by arguments over arcane points of principle could damage the economy.

"The government should be prepared to accept the terms on which transition is offered by the EU27.

Nicky Morgan
Nicky Morgan urged the government to strike a speedy Brexit transition agreement Jeff J Mitchell/ Getty Images

"This may well include accepting EU rules beyond those of the single market and customs union; and it is likely to involve retaining, on a temporary basis, the jurisdiction of the ECJ (European Court of Justice), and the direct effect and supremacy of EU law," she added.

"That is a price worth paying for stability and certainty after 30 March 2019."

The Treasury Select Committee's report warned that visible disagreements over the terms of a transition agreement "would lead to a loss of confidence among businesses, and diminish the value of whatever is eventually negotiated."

European Council President Donald Tusk said this week that the UK and EU faced a "furious race against time" to finalise the terms of Brexit before the March 2019 deadline.

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