Japan has warned Britain that its banks, car manufacturers and pharmaceutical companies may leave the UK for Europe if Brexit leads to the loss of tariff-free trade.

The warning came during the G20 meeting in China, where Theresa May has been conducting talks with world leaders.

A Japanese Government task-force has published a 15 page list of demands from companies and warned that Britain may become an increasingly "unattractive" place for business.

In particular, the document says Japanese firms would like to see the following agreed between Britain and the EU:

Maintenance of trade in goods with no burdens of customs duties and procedures Unfettered investment An environment in which services and financial transactions across Europe can be provided and carried out smoothly Access to workforces with the necessary skills Harmonised regulations and standards

It called for Britain to avoid trade tariffs and suggested that it should also enable workers to move easily between the UK and Europe.

Half of Japanese investment in the EU comes to the UK including companies such as Nissan, Honda, Mitsubishi, Nomura and Daiwa.

The report concludes:

“Japanese businesses with their European headquarters in the UK may decide to transfer their head-office function to continental Europe if EU laws cease to be applicable in the UK after its withdrawal,” the report concludes. It says: “In light of the fact that a number of Japanese businesses, invited by the government in some cases, have invested actively to the UK, which was seen to be a gateway to Europe, and have established value-chains across Europe, we strongly request that the UK will consider this fact seriously and respond in a responsible manner to minimise any harmful effects on these businesses.”

Back of the queue

It came as Barack Obama said he believes Britain was wrong to vote to leave the EU and suggested it is still at the "back of the queue" for a new trade deal.

The US President used a joint press conference with Theresa May to warn that while he does not want to "punish" Britain there is a risk that the trading relationship could "unravel".