The European Union is expecting Britain to pay the full cost of relocating two major EU agencies from London back to the EU after Brexit, in the latest signal that Brussels intends to play hardball over the costs of UK withdrawal from Europe.

The plan, revealed in a leaked draft of the European Commission’s Brexit negotiating mandate, looks certain to raise the temperature of the debate over Britain’s so-called ‘Brexit bill’.

Europe is expecting to reclaim two of its most prestigious UK-based agencies, covering banking and medicine regulations, which employ hundreds of highly skilled staff in offices based in London’s Docklands.

Last week David Davis, the Brexit secretary, indicated that Britain did not accept that the agencies would necessarily have to be relocated inside the EU after Brexit - a position that was swiftly rejected by senior figures across Europe.