The UK has signed a continuity trade deal with Mexico worth more than £5 billion, the Government has announced.

International Trade Secretary Liz Truss said the agreement will allow the two countries to “take our trade to new heights”.

The UK-Mexico Trade Continuity Agreement is expected to benefit the automotive, pharmaceutical, textiles, agriculture, food and drink, and other manufacturing industries.

It will keep tariffs on car and UK beverage exports at 0%, saving tens of millions of pounds in duties which would have been applied under World Trade Organisation terms.

The countries have also agreed to start negotiating a new free trade agreement next year which will go further than the existing deal.

This deal supports a trading relationship worth more than £5 billion and locks in access to each other’s markets

It comes as the UK continues post-Brexit trade talks with the European Union – with just over two weeks until the transition period ends.

Ms Truss said: “This deal supports a trading relationship worth more than £5 billion and locks in access to each other’s markets.

“We look forward to working together with our Mexican friends and allies on a new and ambitious trade agreement in 2021. This will allow our two countries to go much further in areas such as data, digital trade, investment, intellectual property and services.

“This is also the seventh trade deal we’ve secured with a member of CPTPP, the grouping of 11 dynamic economies around the Pacific. So, it’s another really important stepping stone toward the UK joining CPTPP, and I look forward to making our application to do just that early next year.

“Together we’ll enjoy even more success by seizing this opportunity to take our trade to new heights. International trade will help us to overcome the challenges of coronavirus and drive economic growth across our United Kingdom.”