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Image copyright PA Image caption The two sides have no legal basis for an agreement
The UK and the EU have reached the “ultimate deal on a transition period”, the EU has said.
Both sides have no legal basis for an agreement and a referendum is “very much on the cards”, but the future of the UK will be discussed after a transition period.
The UK “will be a full part of the negotiation” of a future relationship, it added.
European Council President Donald Tusk said: “Today is a milestone at which both sides can now step back.”
Earlier, David Davis claimed he was “surprised” by the deal at the heart of the meeting between Theresa May and EU Council President Donald Tusk.
The EU’s negotiator in Brussels, Michel Barnier, said both sides had “no basis” for such an agreement other than the UK being prepared to leave the union.
Tusk said: “Today, the European Council is today, a full council. Our positions on the key issues of the transitional period have been taken into account. What will the EU negotiate on and agree?
“If there is agreement on all these key issues, it will then be for both sides to discuss what is next for the UK.
“An excellent outcome has been reached. This is the ultimate deal.”
A Downing Street spokesman said the prime minister agreed with Mr Barnier: “While both sides agree on the necessity
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