He later said it was "absurd" to think that EU rules were perfect, adding that the bloc had "extreme difficulty in correcting wrong decisions".

The chief nefotiator also said that, were the EU forced to accept UK rules in a reverse scenario, it would be "unsustainable" and at some point democratic consent would "snap – dramatically and finally".

A Number 10 source told The Telegraph: “The EU would never agree to sign up to Britain’s rules with no control over them. The same is true the other way.

“Economic competition boosts wealth for everybody in the long run, and more genuine economic competition across Europe, but it’s not competition for low standards.”

Mr Frost said Michel Barnier, the EU’s chief negotiator, was wrong when he called Brexit an exercise in damage limitation and he hoped to convince Mr Barnier that “Britain doing things differently might be good for Europe as well as Britain”.

He also pointed to Britain’s uneasy history of EU membership, saying: “We were never really, in my view, committed to the same goals. The UK was like a guest who had enough at the party and was trying to find a way of slipping out. We were already in the hallway.”

'Why would we want to postpone independence?'

The European Commission has asked for dynamic alignment in state aid, which governs competition law in areas such as mergers and government bail-outs. That means British rules would change with the EU’s over time, despite the UK having no say in their drafting.

"We only want what other independent countries have," Mr Frost said in reference to EU trade deals with countries such as Canada, which have less stringent level playing field guarantees.

He stressed that Britain "will not extend the transition period beyond the end of this year", despite EU warnings that the time was too short. He said: "At that point we recover our political and economic independence in full – why would we want to postpone it?"

A draft negotiating mandate called for non-regression clauses on the environment, labour rights and tax, but EU governments have moved to strengthen those demands. France is the most influential member state calling for dynamic alignment across the board, which is also supported by the European Parliament.

Brussels argues that the Canada model is not appropriate for Britain because of its close relationship to the EU's economy. It also points out that it is offering zero quotas and zero tariffs in return for guarantees on fair competition, while the Canada deal retains tariffs on some goods.

Mr Frost said Britain would not use Brexit to undercut EU competition rules but insisted precedents in other free trade deals were more appropriate "for the relationship of sovereign entities in highly sensitive areas".

"The only way forward is to build on this approach of a relationship of equals," he said.

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