Britain and the European Union reached a historic deal on Brexit divorce terms on Friday, but Brussels swiftly warned that even harder talks lie ahead on a future relationship after the split.

British Prime Minister Theresa May rushed to Brussels for early morning talks with European Commission President Jean-Claude Juncker to clinch the breakthrough.

The European Commission announced that it judged "sufficient progress" had been made after Britain agreed to keep the Irish border open, pay a 40-45 billion-euro divorce bill and protect expats' rights.

But EU President Donald Tusk -- who will recommend to leaders at a summit next week to open trade and transition talks -- warned that the toughest task was to come.

"Let us remember that the most difficult challenge is still ahead. We all know that breaking up is hard but breaking up and building a new relation is much harder," Tusk said.

Negotiators worked through the night to seal an agreement after the EU set a deadline of Sunday.

May said the key part of the agreement was to ensure there would be no return of checkpoints on the frontier between British-ruled Northern Ireland and EU member Ireland after March 29, 2019, the date Britain is to leave the bloc.

"In Northern Ireland we will guarantee there will be no hard border," she told a press conference with Juncker.

- Northern Ireland 'alignment' -

Northern Irish unionists who prop up May's minority Conservative government scuppered a possible deal on Monday with their fierce opposition to wording they felt would divide the North from the rest of the UK.

The deal commits both sides to respect the 1998 Good Friday agreement, which ended decades of violence between nationalists who want a united Ireland and Northern Ireland unionists loyal to Britain.

Under the agreement, London will try to find a way to avoid a hard border on the island of Ireland "through the overall EU-UK relationship" but if this cannot be achieved, Britain will keep "full alignment" with the EU single market and customs union rules that are crucial to the Good Friday Agreement.

Irish Prime Minister Leo Varadkar welcomed the deal, saying his government had "achieved all that we set out to achieve".

On its divorce bill, previously the most contentious issue, Downing Street said Britain had agreed to pay a settlement of between 35 billion and 39 billion pounds (40 billion to 45 billion euros).

The welfare and social rights of some 3.7 million European citizens living in the UK after Brexit are protected in the deal -- and for eight years after Brexit it gives them recourse to the EU's top court if they feel they are being treated unfairly.

However, the3million, an advocacy group for expats living in Britain, said the deal still leaves people in uncertainty.

The breakthrough was given a cautious welcome around Europe, with German Chancellor Angela Merkel's spokesman calling it a "step forward" and French Foreign Minister Jean-Yves Le Drian saying "common sense" had prevailed.

UK business leaders breathed a sigh of relief, with Josh Hardie, deputy director general of the CBI business lobby saying it opened the door to an accord on trade, the "true prize".

European markets were up and the pound briefly topped $1.35 on the news, though analysts said with difficult trade talks still to come, it was too early to start popping corks.

Tusk warned that with October 2018 set as a deadline for settling a final withdrawal agreement, there was "de facto less than a year" for trade talks -- and it has taken a year and a half since Britain's June 2016 Brexit referendum just to reach Friday's accord.

Senior members of the European Parliament -- which will have to give its approval of the final agreement -- said they were happy with Friday's accord and would vote on it on Wednesday.

Former Polish premier Tusk, who deals with EU leaders, released nine draft guidelines on future relations so member states could approve them for next week's summit.

He said he would propose the "immediate" opening of talks on a transition period, which Britain has estimated at around two years, but warned Britain would have to "respect the whole of EU law, including new law" during that period -- and would have no say in its drafting.

That -- and the continued influence of the European Court of Justice -- is set to infuriate ardent Brexit supporters, including some in May's Conservative party, who have argued for Britain to walk away from the talks with no deal rather than compromise on sovereignty and the financial bill.

- Canada model for trade -

Tusk called for more clarity from Britain on what kind of trade relationship it wants, but the bloc's chief Brexit negotiator Michel Barnier said London had left little room for manoeuvre.

He said Britain's insistence on leaving the single market and customs union gave the EU no choice but to work on a post-Brexit free trade agreement modelled on the bloc's deal with Canada.

"It's not us, it's our British friends who are giving these red lines which close certain doors," Barnier said.

Source: AFP