Mercedes boss Toto Wolff hopes the initial one-year contract signed with Lewis Hamilton will lead to a long-term deal being agreed this year.

On Monday, it was confirmed the seven-time world champion had to committed to the Brackley-based team for a ninth season in 2021, ending months of speculation.

However, the fact it was only a one-year extension has raised questions as to whether Hamilton may simply go and claim a historic eighth Formula 1 title and then retire before new regulations come in for 2022.

"We jointly agreed on a one year deal," said Wolff, speaking to reporters after the announcement.

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"First of all, there is a substantial regulation change in 2022. We also want to see how the world develops, and the company. Plus on the other side, it's because we kept it very late.

"We wanted to discuss the contract at the end of the [2020] season between the Bahrain races and then obviously, Lewis didn't feel well [with Covid-19].

"In the end, we started our conversation just before Christmas so it was important to get it done as soon as possible.

"And in that respect, we thought, let's postpone the discussion about 2022 and onwards to a later stage in 2021."

One of the main areas for speculation had centred around Hamilton's salary demands, with claims he was wanting $40m plus a cut of Mercedes' prize money.

Indeed, unconfirmed figures have suggested the Briton's basic pay is almost four times higher than the next best-paid driver, that being Red Bull's Max Verstappen.

And Wolff did admit the economic situation around F1 and Mercedes due to Covid-19 was another reason for the single-year contract.

"There are uncertainties in the world that affect the way that the sport can operate, that have an influence on our revenue, TV monies, and on sponsorship income," he said.

"Daimler, Mercedes, is in a huge transformation towards electric mobility and that means investments. So we are living in a financial reality that is very different to what it was a few years ago.

"But having said that, we are totally in line, Lewis and me and the wider group at Mercedes about the situation. So there was never any discrepancy in opinion.

"It was just that we felt we could get a good signature on the 2021 contract because we just need to get going and then find some time during 2021, earlier than this time around, to discuss the future.

"And it's not only specifically to 2022, but also beyond. And that is not something that we wanted to carve out via videoconferencing between Christmas and the end of January."

As for whether Wolff believes Hamilton will remain on the F1 grid beyond this year, he admits the ball is in Lewis' court.

“As long as he enjoys racing, I think he’s very capable of going longer,” the Austrian told Sky Sports.

“He develops as a driver he looks after himself in terms of physical training and mental preparation, so I don’t think in terms of ability that ends in 2021.

“But in the end, it’s his decision, Lewis needs to decide what his future holds for him.”