Britain and Spain have reached an agreement on their border at Gibraltar, according to Spanish Foreign Minister Arancha Gonzalez Laya. The agreement will see the rocky peninsula join the EU’s Schengen zone.

With the UK’s post-Brexit relationship with the European Union set to begin on New Year’s Day, British and Spanish negotiators scrambled to avert a hard border between Spain and Gibraltar, an outcrop administered by Britain but claimed by Madrid.

Spanish Foreign Minister Arancha Gonzalez Laya told reporters Thursday afternoon that both countries had reached an “initial agreement” that would see the territory remain in several EU treaties, and join the EU’s Schengen zone, which guarantees free movement between most European countries. As such, Spaniards and residents of Gibraltar will be allowed to freely cross the 1.2km long border separating Gibraltar from mainland Spain.

The agreement is crucial to the 15,000 residents of Spain who work in Gibraltar, and the Gibraltarians who shop and own property in Spain.

UK citizens entering Gibraltar, however, will need to show their passports to EU border guards from Friday onwards.

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