The 27 EU member states gave the green light on Monday (28 December) for the post-Brexit trade deal to go into effect on January 1, a spokesman said.
Ambassadors from EU capitals met in Brussels to nod through the accord, using a procedure which will take effect at 3:00 pm on Tuesday.
This will provisionally allow tariff-free trade with Britain to continue after it leaves the EU single market at the New Year.
Sebastian Fischer, spokesman for the German presidency of the EU, said: “EU Ambassadors have unanimously approved the provisional application of the EU-UK Trade and Cooperation Agreement.”
The member states’ adoption of the plan allows it to come into effect in time to head off disruption of cross-Channel trade.
But the deal must still be ratified retrospectively by the European Parliament, probably in late February.
Most British businesses have made preparations for the end of the Brexit transition period, cabinet office minister Michael Gove said on Monday, adding it was important they were ready for changes to trading and regulatory rules.
Asked if businesses were ready for the end of the transition period on December 31, Gove said: “Yes. The overwhelming majority of businesses have been getting ready, absolutely.”
“I think business is broadly in a good place but inevitably with any change, with any transition, there are occasional bumpy moments,” he added.
German stocks rally
Germany’s main stock index reached a record high on Monday, buoyed by a pandemic recovery package agreed in the US and the Brexit deal.
Having been closed since December 23, the blue-chip DAX index bounced 1.7%, reaching 13,819 points at the open, topping the previous high set in February before the coronavirus pandemic forced Europe into lockdown.
The index has now pared some of its gains to 13,791 points, a rise of 1.5 percent.
The jump came after US President Donald Trump signed a $900 billion (€735 billion) stimulus bill late Sunday, averting a government shutdown and removing considerable uncertainty for the world’s largest economy.
The US leader had previously refused to sign the relief package, arguing that it included wasteful spending.
The Brexit deal and the US aid package were pushing the DAX to “a new high”, Jochen Stanzl, an analyst at CMC Markets, said.
The market is “breathing a sigh of relief” after the Brexit deal, independent analyst Timo Emden added.
Germany began rolling out its first Covid-19 vaccinations on Sunday, but some delays were reported and production capacity remains limited.
“For the markets, it remains crucial to get Covid-19 under control as soon as possible,” Emden said.