Britain has been warned the prospect of "frictionless trade" with the European Union post-Brexit is "not possible".

In a stark rejection of Theresa May's negotiating position, the EU's chief Brexit negotiator Michel Barnier said it appeared the Government still does not understand the bloc's position on the single market.

The Prime Minister has said she wants trade with the EU to be "as frictionless as possible", while Brexit Secretary David Davis has said a new trade deal should deliver the "exact same benefits" as single market membership.

But Mr Barnier said Mrs May's "red lines" for a future trade relationship mean the UK is definitely leaving the single market and the customs union.

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He told an EU committee in Brussels that only membership of both of these elements of the EU permitted the current "frictionless" trading arrangements.


Mr Barnier said he was unsure the EU's refusal to grant piecemeal access to the single market and insistence on controlling standards in the single market "have been fully understood across the channel".

In response, the PM's official spokesman stuck by the Government's stance, saying: "We want a comprehensive free trade agreement and a new customs agreement which allows for trade which is as frictionless as possible.

"Obviously we are just at the beginning of the negotiations but I would say that the most frictionless possible trade between the UK and the EU is clearly in the interests of both sides."

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Foreign Secretary Boris Johnson also said he had "absolutely no doubt" Britain would be able to negotiate a "great free trade deal" with the EU.

In his address Mr Barnier said there would be "negative" consequences to Britain's decision to leave, but not from any attempt by the EU to "punish" the UK.

Brexit would create a "loser/loser situation" for both sides, he continued, adding this would be made worse if the two sides failed to agree a deal.

Mr Barnier stressed that Brussels had made clear to the UK that the EU's "four freedoms" - including freedom of movement - are indivisible, that there can be no sector-by-sector participation in the single market and that the EU will keep full sovereignty over its rules and regulations.

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"These three points were already made very clear by the European Council and European Parliament, but I am not sure whether they have been fully understood across the Channel," Mr Barnier said.

"I have heard some people in the UK argue that one can leave the single market and keep all of its benefits. That is not possible.

"I have heard some people in the UK argue that one can leave the single market and build a customs union to achieve frictionless trade. That is not possible.

"The decision to leave the EU has consequences and I have to explain to citizens, businesses and civil society on both sides of the Channel what those consequences mean for them.

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"These consequences are the direct result of the choice made by the UK, not by the EU.

"There is no punishment for Brexit and of course no spirit of revenge.

"But Brexit has a cost, also for business in the EU27, and businesses should assess with lucidity the negative consequences of the UK choice on trade and investment and prepare to manage that."

Mr Barnier said he was ready for the Brexit talks to fail, but said "no deal" would be damaging, especially for Britain, and saw "no reasonable justification" for it.

"A fair deal is far better than no deal," he said, turning around a phrase popularised by Mrs May that "no deal is better than a bad deal".

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Mrs May has previously threatened to walk away from exit talks if she views the offer on the table as a "bad deal", but such a prospect is deemed be less likely in the wake of Mrs May losing her Commons majority.

Mr Barnier called for a quick agreement on the priority issues in the Brexit negotiations that started last month so as to build a "climate of trust".

Doing so would allow trade negotiations to begin as soon as possible, he said.

The EU has stood firm its insistence that talks on the future trading relationship between Britain and the bloc can only begin once significant progress has been made on other issues, like citizens rights and the so-called "exit bill".

Meanwhile, Labour leader Jeremy Corbyn has told Bloomberg he is going to meet with Mr Barnier next week to "outline what our issues are".