The UK and EU have agreed a deal for their future trading relationship after the Brexit transition period ends on December 31, the two sides announced.

European Commission president Ursula von der Leyen told a Brussels press conference on Thursday: “It was a long and winding road but we have got a good deal to show for it.

“It is fair, it is a balanced deal and it is the right and responsible thing to do for both sides.”

Boris Johnson simply tweeted: “The deal is done.”

EU chief negotiator Michel Barnier, meanwhile, summed up the relief at the end of four-and-a-half years of talks since the UK voted to leave the EU in June 2016, confirming: “The clock is no longer ticking.”

But he added: “Today is a day of relief tempered by some sadness as we compare what came before with what lies ahead.”

The historic agreement comes after marathon final negotiations went through the night on December 23, fuelled by delivery pizzas, and well into Christmas Eve as the clock ticked down towards the December 31 deadline, when current trading arrangements expire.

Reports suggest that as well as the talks in the room involving UK chief negotiator Lord Frost, Barnier and von der Leyen’s aide Stephanie Riso, a series of phone calls between Johnson and the European Commission president helped seal the deal.

Von der Leyen appeared to rebuke Johnson’s repeated trumpeting of “sovereignty” during the negotiations, suggesting countries are better off “pooling our strength”.

“We should cut through the soundbites and ask ourselves what sovereignty actually means in the 21st century,” she said.

“It is about pooling our strength and speaking together in a world full of great powers.

“In a time of crisis, it is about pulling each other up instead of trying to get back to your feet alone.”

But she finished her opening remarks on an emotional note, saying “parting is such sweet sorrow”.

The deal means the UK has agreed terms for its £668bn trading relationship with the EU from January 1, after the end of the Brexit transition period during which the country has continued following Brussels rules.

There will continue to be no tariffs or quotason trade between the UK and EU.

But the UK will leave the European single market and customs union, which have allowed seamless trade for decades, with new barriers including customs controls and checks imposed on British firms trading with the EU.

It means the UK has avoided the potential disaster of a no-deal Brexit.

But the independent Office for Budget Responsibility (OBR) has forecast that, even with this kind of trade deal, there will be a 4% long-term hit to the economy and a delay to the UK’s recovery from Covid.

The die was cast on this form of hard Brexit when Johnson was elected Tory leader and PM, winning an 80-seat majority on a promise to negotiate a loose “Canada-style” trade agreement that would untether the UK from EU law.

Despite avoiding no deal, there is still the potential for disruption from January 1 as businesses and the government adapt to new customs controls that could slow down movement through ports.

The agreement was found after the UK and EU reached compromises on the sticking points that have plagued the talks – the so-called level playing field for standards in areas like workers rights and the environment, and fishing rights.

At a Downing Street press conference, Johnson said the UK and EU had found an agreement on the level playing field that will allow, subject to arbitration, both sides to impose tariffs on the other, if the other maintains lower standards in areas like workers’ rights or the environment that are judged to amount to unfair competition.

The move will be seen as a concession by the UK, but also a watering down of Brussels’ initial demands to be able to unilaterally impose “lightning” tariffs on its partner over lower standards.

Johnson also said the UK had compromised on fishing rights by agreeing to a five-and-a-half-year transition period.

He said the EU had initially demanded a 14-year transition, while the UK had wanted three.

In comments that risked a backlash from fishing communities, the PM also revealed that the UK would not initially be allowed to catch all the fish in its waters under the terms of the deal, revealing the share would rise “substantially from roughly half today to closer to two-thirds” over the transition.

Frost claimed the deal “restored Britain’s sovereignty in full”, as Barnier revealed that the UK had chosen not to continue taking part in the Erasmus student exchange programme. 

It comes after Johnson himself repeatedly claimed that no deal was the most likely outcome, and after he missed several of his own deadlines for agreement.

Parliament is expected to be recalled next week to pass the agreement.

All eyes will be on the size of any rebellion from hardcore Tory Brexiteers in factions like the European Research Group (ERG), which is recconvening its so-called “star chamber” of legal experts to examine the 2,000 or so pages of text.

But the deal is expected to pass, with Labour signalling for weeks it is likely to back it or, if not, to abstain.

A deal will also have to be backed by the EU’s 27 member states, with ambassadors preparing to meet “during the Christmas period” to consider the deal.