High probability of a Brexit deal with European Union, says David Davis

The Government suffered a further defeat, linked to the earlier one, when peers voted by 285 to 235, majority 50, to remove the ability for ministers to specify in regulations cases where individuals may bring challenges against the validity of retained European Union law.

The customs union which covers Europe was created in 1958 as part of the European Economic Community (EEC), which then evolved into the EU.

The PM Theresa May has ruled out being in an EU customs union after Brexit.

Conversely, goods that travel from outside such an agreement are generally subject to additional levies and checks that cost both time and money.

They could rationalize a vote against May as acting in the best interests of the UK.

Barnier said: "The single market at 27 [countries] will consist of 440 million consumers and 22 million enterprises. Leaving the single market would mean new checks on food safety or product conformity needing to be made at the European Union border, unless less intrusive arrangements can be negotiated and implemented in time".

"The government is absolutely clear and without ambiguity that we will be leaving the customs union and won't be joining a customs union", he told reporters.

Vocal pro-Brexit campaigners have also held her to her position on the customs union, leaping to protest at any hint she could seek a compromise on ties to prevent a return of a hard border that might reignite sectarian violence. A new debate on this is scheduled in the Commons for Thursday, adding to the pressure on May.

The person who is expected to solve this conundrum is Theresa May. What's more, the Prime Minister has no overall parliamentary majority for her ruling Conservative Party, which is only in power because of the support from the smaller Northern Irish Democratic Unionist Party.

As this archly annotated Credit Suisse deck points out, May only has one real option left: Staying inside the EU's customs union.

If those goods didn't leave the United Kingdom and UK tariffs were lower, companies could then claim back the difference. Critics have derided that scheme as unwieldy and unlikely to work, no matter what tracking technology comes to market.

The independent MEP reacted angrily when asked about calls for a second referendum of which even Nigel Farage has seemingly consigned himself.

A government spokesman said it means the Welsh regional government will now recommend that the National Assembly for Wales pass a legislative consent motion for the bill.

One of the MPs putting her name to the motion is Tory Sarah Wollaston who defended the debate.

Saying she was "not going to be drawn" on the issue, Ms Rudd said the Government was "still working on" its position, which would require further discussions with Cabinet colleagues.

  • Eleanor Harrison