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The European Union warned Britain to expect the “negative economic consequences” of Brexit today as it rejected Theresa May’s call for a bespoke trade deal.

In its opening offer for negotiations, Brussels instead offered a no-frills “free trade agreement” excluding unfettered access for the UK’s financial sector.

Its six-page document, seen by the Standard, warns that quitting the bloc’s custom union and single market “will inevitably lead to frictions”.

Brexit will “unfortunately will have negative economic consequences,” it adds.

Failure to adhere to EU rules and their enforcement by EU courts “necessitates checks and controls” at borders such as with France and Ireland, the text says.

The document calls for free trade in goods, where the EU exports more to Britain than it imports, but omits the banking and financial services, where UK has a £20 billion surplus.

Britain would not be allowed to slash company taxes, bail out struggling industries or axe costly environmental protection, the text says, as they could give the UK an “unfair competitive advantage”.

The EU also demands the right to fish in British waters on a reciprocal basis.

Although the text urges “as close as possible a partnership with the UK in the future”, it says Mrs May’s red lines will “limit the depth of such a future partnership”.

“A non-member of the union that does not live up to the same obligations as a member, cannot have the same rights and enjoy the same benefits as a member,” the text says.

The offer goes beyond trade to cover security, defence and foreign policy, as well as policing, data protection, aviation, research and education. But it excludes the UK from “participation in” EU institutions, agencies and bodies on the same basis as bloc members.

“Such an agreement cannot offer the same benefits as membership and cannot amount to participation in the single market or parts thereof,” the document says.

Calling for a “level playing field”, the EU text states: “The aim should be to prevent unfair competitive advantage that the UK could enjoy through undercutting of current levels of protection with respect to competition and state aid, tax, social, environment and regulatory measures and practices.”

The document makes clear Britain will be expected to pay cash fees to take part in EU programmes covering research, education and culture. This would be “subject to the relevant conditions” in the next seven-year budget.

In a separate rebuff to the UK, a draft resolution of the European Parliament called for measures to curtail Mrs May’s proposal that Britain could adopt different regulations in some areas.

Instead, there should be a “binding convergence mechanism” to ensure permanent alignment with EU laws as the price for a “deep and comprehensive” trade deal.

This morning Pascal Lamy, the former head of the World Trade Organisation, dismissed a planned speech by Chancellor Philip Hammond calling for financial services to be included in a trade deal as “a bit vague”. “Whatever they get, this will be much more fragile, much less business-stable,” he told the BBC.

Mr Hammond was due to highlight the EU’s attempts to seek “ambitious financial services co-operation” with Canada and the US in free trade deals. He was to say: “If it could be done with Canada or the USA, it could be done with the UK — the EU’s closest financial services partner by far.”