Britain risks becoming a "joke nation" if it cannot formally sign trade deals in the 20 month transition period after the UK leaves the European Union, the most senior Eurosceptic Tory backbencher has warned.

Jacob Rees-Mogg, the Tory MP who leads the European Research Group, warns Theresa May that she cannot not accept any deal that leaves the UK as a "subservient state”.

David Davis, the Brexit secretary, is in Brussels on Monday in a bid to try to finalise the terms of the transition period after Britain leaves the European Union in March next year.

British officials are cautiously optimistic that the two sides can agree a transition agreement to prolong the UK's membership of the single market and customs union for about two years, most likely until the end of December 2020.

During this time Britain must implement all existing and new EU laws but will also be stripped of its voting rights in Brussels.

One concern remains whether Ireland will try and derail any deal before it is signed off at a key European Council meeting on Thursday. Britain, Ireland and the EU are set to hold fresh tripartite talks next week.