Brexit: What is the customs union and why does it matter?

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Davis told the Brexit committee he expects government policy on Brexit to be upheld by politicians, insisting the government would win the critical looming vote on leaving the EU customs union.

European Union negotiators last week gave a "detailed and forensic rebuttal" to the feasibility of two options put forward by Prime Minister Theresa May in her Mansion House speech last month.

Prime Minister Theresa May is under growing pressure to make a U-turn and keep the U.K.in the customs union after Brexit.

MailOnline brings you the latest updates here.

The Lords voted 349-221 in favour of an amendment to change the wording of the bill so that instead of ministers being able to use the Henry VIII powers where they consider it "appropriate", they would have to prove it was " necessary". The so-called "Withdrawal Agreement" mapping most of this out is set to be cleared at an European Union leaders' summit next October.

When the European Union published its vision for the two sides' future relationship at a summit in March the bloc said it would revise them when leaders reconvene in June to take account of any changes in United Kingdom policy.

May's rather draconian move follows a series of reports of Tory Cabinet members preparing to rebel against their leader, if the PM were to backdown on leaving the customs union.

The contract, which was awarded in January, ended last month, on the same day the government secured European Council backing for a transition deal that unlocked the current round of Brexit talks on Ireland and the future relationship.

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"We are leaving the customs union and won't be joining a customs union", he said, repeating that such an agreement would constrain Britain's ability to sign its own trade deals.

The EU Withdrawal Bill debate will inform the biggest battle over Brexit, expected in October or November, when lawmakers vote on the final deal negotiated with Brussels.

Vocal pro-Brexit campaigners have also held her to her position on the customs union, leaping to protest at any hint she could seek a compromise on ties to prevent a return of a hard border that might reignite sectarian violence.

CNBC takes a look at what the customs union is and what could happen next.

Mr Barnier said Britain is "closing doors" on the EU by planning on quitting the single market and customs union. What's more, the Prime Minister has no overall parliamentary majority for her ruling Conservative Party, which is only in power because of the support from the smaller Northern Irish Democratic Unionist Party.

This means when goods have cleared customs in one country, they can be shipped to others in the union without further tariffs being imposed.

The options on the table are either a "customs partnership", derided by Jacob Rees-Mogg this week as "completely cretinous" - or a highly streamlined arrangement based around technology.

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