Failing to leave the customs union would be “awful for Britain and for the world,” New Zealand’s former High Commissioner warned on Friday, as he said the UK might as well abandon Brexit if it cannot take control on trade.

Sir Lockwood Smith, who also served New Zealand as a minister for agriculture and international trade, said the UK could boost productivity and innovation if it were no longer “locked into” the EU system.

Leaving the customs union and the single market, he said, would potentially allow the UK to pursue world-leading reforms in the services and agricultural industries.

“It’s a wonderful opportunity to really lead the world in modern trade development thinking, and the world needs that,” Sir Lockwood told the Telegraph.

"I would be deeply saddened if UK remained in a customs union because were that to happen it would be a guaranteed lose-lose situation. You’d be better off staying in the EU."

“It would be awful for the UK and for the world...don’t forget that it matters to the world what happens to the UK. We need the UK to do well."

His warning illustrates how Britain's ability to set its own tariffs and strike deals is viewed beyond Europe as a crucial step towards making a success of Brexit.