British prime minister Theresa May and head of the European Union executive arm the European Commission Jean-Claude Juncker met in Brussels last night for what has been described as a “constructive and friendly” dinner.

The pair agreed negotiations on the UK’s exit from the European Union should “accelerate over the months to come”, ahead of an EU summit in Brussels later this week.

EU leaders will decide at Thursday’s European Council summit whether talks can move from discussing the separation to plotting a new trade accord — something that must be agreed before March 2019 to prevent the UK falling back on World Trade Organisation rules in its trading with the EU.

Downing Street last night threw cold water over suggestions the dinner had been planned due to Brexit talks not making desired progress following May’s landmark Florence speech setting out the UK’s objectives, saying it had been in the “diary for weeks”.

The three issues the EU wants to be resolved before talks progress to trade — the amount the UK owes the EU when it leaves, the future rights of EU citizens in the UK and UK citizens living in the EU, and what happens on the Northern Ireland border — have dominated the conversation ahead of the Brussels summit.

A transient transition

Meanwhile, both sides have been warned a transitional Brexit deal must be struck urgently before it becomes “too late” to protect businesses.

The influential financial lobbying group TheCityUK has said the value of a Brexit transition deal is “disappearing by the day” with jobs, companies, and capital soon to begin fleeing the UK, and potentially even Europe, unless a deal is struck soon.

TheCityUK report said:

Without early agreement on transition, the market will inevitably fragment, impacting services to UK, EU and global consumers, and likely increase the cost of products and services for customers across the continent.

Analysis by Oliver Wyman for TheCityUK suggests that if the UK’s future relationship with the EU were to rest largely on WTO obligations with no transitional arrangements in place, 40 percent to 50 percent of EU-related financial services activity (approximately £18bn-20bn in revenue) and up to an estimated 31-35,000 jobs in the sector could be at risk, along with approximately £3-5bn of annual tax revenues.

Taking into account the potential ecosystem impact, the numbers could be as high as 75,000 jobs and £8-10bn in tax revenues.

Even if the final UK/EU agreement permits similar levels of mutual market access to the status quo, its positive benefits could be minimal unless transitional arrangements are urgently clarified. Once contingency plans have been implemented, they are unlikely to be unwound: the additional costs of moving business and jobs back to the UK would simply be too high.

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Miles Celic, chief executive of TheCityUK, said:

Firms are beyond the planning stage now. If they haven’t done so already, most will be ready to press go on their contingency plans in the new year. They can still take their foot off the accelerator if a transitional deal is agreed, but without progress soon, it may be too late. Once businesses start moving, there is no reverse gear. It is simply not efficient or economically viable to move operations twice.

Priced out

A separate report — by think-tank the Resolution Foundation — suggests that leaving the EU without a trade deal would lead to a significant rise in living costs for millions of people in the UK.

Research and trade experts at Sussex University calculated the average household would pay an extra £260 a year for imported goods.

For 3m households — those who consume the most imported goods — that figure would nearly double to £500 a year.