THE breakthrough in the Brexit negotiations has been welcomed in business quarters after months of uncertainty but rapid progress on Britain’s future trading status with the EU is still required.

On Friday the European Commission has agreed to recommend the start of talks on Britain’s future trade relationship with the EU after six months of Brexit negotiations.

The decision, which must be approved by leaders of the remaining 27 EU states on Thursday, was hailed by PM Theresa May as “a hard-won agreement in all our interests”, while European Commission president Jean-Claude Juncker said it represented “sufficient progress” for negotiations to move on to their second phase.

Ross McNally, executive chairman of Hampshire Chamber of Commerce, said: “We urge the Government to move swiftly in securing the best possible trade deal, so important to businesses in Hampshire and across the UK. It is vital that uncertainty is lifted and companies are able to continue to do what they do best, providing world-leading products and services across Europe and beyond.”

Stephen Phipson, chief executive of the manufacturing body EEF, said: “Many employers will be relieved that their EU employees have more certainty going forward, and Government must now clarify the rights of EU citizens by Christmas so that they are not concerned about their future.”

Attention will now turn to trade. Britain is due to exit the single market and customs union in 2019.

Mr Phipson said businesses are still waiting for news of a transition deal that would extend market access beyond that date.

“We need to pin down the transition arrangements which will be in place after March 2019, to ensure it’s business as usual for companies for as long as it takes until a final deal is reached.

Amid Friday’s mild optimism one report showed that the confidence of UK businesses has faltered against the backdrop of protracted and unclear Brexit negotiations.

The latest Business Trends Report by accountants and business advisers BDO LLP revealed that the BDO Optimism Index - which indicates how firms expect their order books to deliver over the coming six months – has declined to 102.05, from 103.17 in October.

It now sits at its lowest level since April this year and is only just above the long-term trend of 100.

The slowing performance the services sector is driving the decline. BDO’s Services Output Index fell from 99.24 in October to 98.95 in November.

Malcolm Thixton, lead partner, BDO Southampton, said: “The unprecedented political and economic climate is stunting the growth of UK business.

“The continued absence of clarity about our potential Brexit trade deal leaves businesses lacking confidence to make important decisions regarding future investment and direction.”