The EU has devised a clause to protect businesses from state subsidies proposed by the Labour leader TIMES PHOTOGRAPHER JAMES GLOSSOP

Britain faces restrictions on post-Brexit trade and draconian measures to enforce free-market policies because the European Union fears a future Jeremy Corbyn government.

Senior European officials have told The Times that concerns over Labour’s economic policies are the main reason for the EU’s insistence on a tough “level playing field mechanism” in a future deal after Britain leaves.

The revelation came as the dispute intensified in senior Tory ranks over the customs arrangement between Britain and the EU after Brexit. Jacob Rees-Mogg accused Greg Clark, the pro-EU business and energy secretary, of promoting “Project Fear” by saying that thousands of jobs were at risk if Britain did not minimise friction in trade. Mr Clark advocated the customs partnership preferred by Theresa May but which is…