A "no deal" outcome from the Brexit negotiations would lead to a £500 billion loss for the European Union, according to a new analysis.

A study by Patrick Minford, a professor of economics at Cardiff University, states that while a failure to reach a deal would lead to "short term nuisance" for both sides, Brussels would face a "substantial economic loss", compared to a net gain for the UK.

Prof Minford, who chairs the Eurosceptic Economists for Free Trade group, concludes: "It could not be more open and shut who least wants a breakdown".

The analysis comes after David Davis, the Brexit Secretary, complained in a letter to the Prime Minister that Brussels was damaging British interests by talking up the threat to companies if the UK leaves the European Union without a deal.

Prof Minford said: "For the UK a breakdown would be a short term nuisance but a substantial economic gain; for the EU it is both a short term nuisance and a substantial economic loss."

According to the analysis, the largest cost to the EU would be from paying the UK some £433 billion in tariff revenue. It would also lose around £28 billion which the UK would otherwise pay into the budget period to 2020, and a reported £10 billion contribution to longer term liabilities, as part of a financial settlement, Prof Minford concluded.