A new UK-EU free trade area for goods will be created under Brexit plans agreed by Theresa May and her ministers at Chequers today.
However, after a day of crunch talks, the cabinet agreed to step up preparations for a “no-deal” Brexit.
The trade proposals mean the UK will have the same rules for all goods as it currently does as a member of the bloc.
However, the government wants the UK to be free to diverge from EU rules over services, one of the biggest drivers of the UK economy.
During a day of discussions at the prime minister’s Buckinghamshire retreat, ministers accepted the new trade plan would reduce the levels of access available to European markets.
Ministers also appeared to acknowledge the EU is unlikely to consider any plan which would risk splitting the single market by stepping up preparations for a “no-deal” Brexit.
Theresa May said she hoped the proposals would allow for talks with the EU to move forward after months of stalling from both sides.
The prime minister faced a split as her cabinet and advisers arrived at Chequers on Friday morning, with Brexit Secretary David Davis understood to have serious reservations about the plan, and whether Brussels would even consider it.
However, it is understood all members of the cabinet have agreed to the proposals and none have decided to resign rather than back the plan.
Speaking after the crunch talks, Mrs May told Sky News: “This is an important further step in our negotiations with the European Union.
“But of course we still have lots of work to do in ensuring with the EU we get to the end point in October.
“But this is good, we have come today, following our detailed discussions, to a positive future for the UK.
“This will deliver security and prosperity for our people.”
She said the cabinet had agreed a “collective position” on future negotiations with the EU, by establishing a “common rule book for industrial goods and agricultural products”.
“This maintains high standards in these areas, but we will also ensure that no new changes in the future take place without the approval of our Parliament,” she said.
“As a result, we avoid friction in terms of trade, which protects jobs and livelihoods, as well as meeting our commitments in Northern Ireland.
“We have also agreed a new business-friendly customs model with freedom to strike new trade deals around the world.”
By still being attached to the EU’s “common rulebook” it could reduce the UK’s flexibility to strike trade deals with other countries, particularly the US.
The US would want an agreement allowing its farm products, which are produced to different standards, into the British market.
The UK would also have to pay “due regard” to European Court of Justice rulings relating to the rules Britain will share with Brussels, potentially softening Mrs May’s red line on the jurisdiction of judges in Luxembourg.