17:30

Philip Hammond has put Britain on a collision course with Brussels after he warned the government could reject any Brexit trade deal not including financial services.

Speaking at the headquarters of HSBC at Canary Wharf in the heart of the financial district on Wednesday, the chancellor said a trade deal “will only happen” if it balanced the interests of both the UK and the EU.

“It’s hard to see any deal that did not include financial services can look like a fair and balanced deal,” he said.

His speech moves talks with Europe to yet another impasse, after the EU council president Donald Tusk warned earlier on Wednesday the UK would not be allowed to “cherry pick” what it liked in trade talks with Brussels. Tusk suggested a Canada-style free trade deal was the only one on the cards, which would be likely not to include comprehensive coverage of services.

The speech also puts the chancellor in direct opposition to his French counterpart, Bruno Le Maire, who intervened on Tuesday evening to rule out financial services being part of a trade deal.

“We don’t believe that financial services can be part of an FTA,” Le Maire said in a speech in London.

Hammond’s speech will be seen as a rebuke to the EU’s negotiating position, while he also warned that any attempts by European countries to steal financial services business from London would backfire. He said: