The EU's chief negotiator Michel Barnier has said the UK should expect a trade model akin to that signed with Canada.
Barnier told European reporters that a future trade deal would have to be negotiated over “several years” and “will be very different” from the status quo, adding that the Comprehensive Economic and Trade Agreement (CETA), was the best that could be achieved.
“From the moment the UK told us that it wants out of the single market and the customs union, we will have to work on a model that is closer to the agreement signed with Canada.
“The single market is a set of rules and standards and is a shared jurisdiction. Its integrity is non-negotiable, as is the autonomy of decisions of the 27. Either you’re in or you’re out.”
British Prime Minister Theresa May has already rejected the possibility of adopting the Canadian model as "stark and unimaginative".
During her feted Florence speech, she said CETA was the "most advanced" deal negotiated between the EU and a third country but added: "Compared with what exists between Britain and the EU today, it would nevertheless represent such a restriction on our mutual market access that it would benefit neither of our economies."
CETA lifts 98 per cent of tariffs on imports between the two parties, but does not significantly reduce non-tariff barriers for trade and offers no lifeline for the City, which could lose passporting rights under such an agreement.
Liberal Democrat leader Vince Cable said: "A Canadian deal would leave our hugely important financial services sector without passporting rights. It would also leave manufactured goods that contain components from outside Britain subject to tariffs.
“This would be a very poor substitute for our membership of the single market and customs union. The exodus of firms would accelerate. Nobody voted to be poorer, and this would hit living standards.
“Canada is thousands of miles away and also enjoys a separate trade arrangement with its neighbours. It also took seven years to negotiate and Barnier has warned that such a deal with Britain could take a similar time to strike. If this is the best the UK can hope for, we are in trouble.”