The free movement of EU nationals to the UK could continue for up to four years after Brexit, it emerged on Friday (21 July). Multiple reports have claimed that Theresa May's cabinet have accepted such a compromise with Brussels so that British businesses can avoid a so-called "cliff edge" after the split in 2019.
"If you ask business when they want to see it agreed, they'd say tomorrow," a government source told The Guardian.
The development comes after a series of briefings against Chancellor Philip Hammond, a Remain campaigner who supports a transitional deal.
Eurosceptic Brexit Secretary David Davis had previously ruled out such a move, arguing that the UK can split from the EU's customs union and single-market by 2020.
News of the cabinet's shift in mood follows the first meeting of May's new business council, including BAE Systems chairman Sir Roger Carr, Tesco chief Dave Lewis and FSB policy chairman Mike Cherry, in Downing Street.
"The Prime Minister emphasised her desire to listen to the views of business, to channel their experience and to share with them the government's vision for a successful Brexit and a country in which growth and opportunity is shared by everyone across the whole of the UK," a Number 10 spokesperson said.
"On Brexit, the Prime Minister reiterated that the Government's overarching goal is for a smooth, orderly exit culminating in a comprehensive free trade deal with the EU, with a period of implementation in order to avoid any cliff-edges.
"The Prime Minister welcomed the valuable contributions which have come from discussions with business at various levels of government over the past year, including on the development of a modern industrial strategy, and emphasised the need for this engagement to intensify over the period ahead."
Elsewhere, Davis and the EU's chief negotiator Michel Barnier failed to find agreement over the residency rights of the more than three million EU nationals in the UK and the more than one million Britons on the continent.
The disagreement is over whether the European Court of Justice (ECJ) should have jurisdiction over the UK after Brexit, something the Conservative government does not want.
"This is not a political point we're making, it's a legal one," Barnier told a Brussels press conference on Thursday. "Simply, if there is to be continuity of EU law that has to be framed by case law of the court, only the court can interpret EU law. It's not a choice, it's an obligation."