Britain could reject any Brexit trade deal that excludes financial services because it would not be fair to both sides, Philip Hammond warned today.

The Chancellor, making the last of a series of Government speeches on the 'Road to Brexit', said just because financial services had never been included in a deal before did not mean it could not be done.

Speaking in the heart of London's Canary Wharf financial district, Mr Hammond said every trade deal ever struck by the EU was unique and Britain's would be no different.

The remarks will be seen as a rebuke to EU Council President Donald Tusk who repeated warnings today the UK could only hope to have a basic deal on existing third party terms if it refused to stay inside EU institutions after Brexit.

Chancellor Philip Hammond (pictured today making his speech) has long argued that financial services should be part of the Brexit deal

Speaking at HSBC in the heart of London's Canary Wharf financial district, Mr Hammond (pictured with HSBC CEO John Flint) said every trade deal ever struck by the EU was unique and Britain's would be no different

Mr Hammond said: 'A trade deal will only happen if it is fair and balances the interests of both sides.

'Given the shape of the British economy and our trade balance with the EU27, it is hard to see how any deal which didn't include services could look like a fair and balanced settlement.

'I'm clear not only that it is possible to include financial services in a trade deal, but it is very much in our mutual interests to do so.'

The Chancellor added: 'It is time to address the sceptics who say a trade deal including financial services cannot be done because it has never been done before: to them I say: 'every trade deal the EU has ever done has been unique'.

WHEN WILL BRITAIN BE OUT OF THE EU? Britain triggered Article 50 on March 29, 2017, starting a two year process for leaving the EU: March 2018: Outline transition deal agreed, running for about two years June 2018: EU summit that Brussels says should consider broad principles of a future trade deal. October 2018: Political agreement on the future partnership due to be reached Early 2019: Major votes in Westminster and Brussels to ratify the deal March 29, 2019: Article 50 expires, Britain leaves the EU. Transition is expected to keep everything the same for about two years December 31, 2020: Transition expected to come to an end and the new relationship - if it has been agreed - should kick in Advertisement

'The EU has never negotiated the same arrangement twice.'

In response to the speech, the chief Executive of UK Finance Stephen Jones said: 'Both the EU and UK now agree on the need for an ambitious trade deal that includes services. The focus must now be on achieving the best possible outcome for jobs and prosperity on both sides of the Channel.

'The Chancellor has today set out a credible approach that would preserve many of the benefits of free trade in financial services while giving both sides autonomy.'

In his speech, Mr Hammond also rejected an EU demand for continued access to British fishing waters with nothing in return.

'Fishing is an iconically important British industry and we are very clear that we are taking control of our waters,' he said.

'But of course we would be open to discussing with our EU partners about the appropriate arrangements for reciprocal access for our fishermen to EU waters and for EU fishermen to our waters.

'We would have to negotiate the basis on which such an arrangement could be fair and appropriate for us.'

The remarks will be seen as a rebuke to EU Council President Donald Tusk who repeated warnings today the UK could only hope to have a basic deal

He also used the speech to point out the critical role played by the City as the cornerstone of Europe's financial system.

Tusk warns the UK cannot just choose bits of the single market it likes Donald Tusk today said Britain cannot take a 'pick and mix approach' to Brexit as he warned trade will become 'more complicated and costly' in the future. The European Council President said that as Theresa May has ruled out staying in the EU single market and customs union the only option on the table is a free trade deal. He warned Britain cannot have the 'rights of Norway' - which is in the single market - with only the 'obligations of Canada' - which is outside but has a free trade deal. Mr Tusk said Brexit will be the first time in history that two partners have decided to loosen economic ties. But he also said he hopes to negotiate an 'ambitious' free trade deal with Britain which will mean no tariffs are put on goods traded. He said: 'Our agreement will not make trade between the UK and EU frictionless or smoother. 'It will make it more complicated and costly than today for all of us. This is the essence of Brexit.' Advertisement

And he warned that European consumers would face higher prices for a wide range of goods, including cars, loans and fuel, if the City is cut out.

Mr Hammond stressed that the UK and EU markets are 'deeply interconnected', with the City providing finance for European bank loans and car financing, as well as helping firms cope with fluctuating exchange rates and fuel prices.

'In a nutshell, the message is that cutting out the City will mean higher prices for European consumers – people should be very careful,' said a Treasury source.

The Chancellor also took a swipe at the EU's chief negotiator, Michel Barnier, who has warned repeatedly that financial services fall outside the scope of any agreement.

He pointed out that Mr Barnier played a key role in trying to include services in an EU-US trade deal.

Mr Hammond held talks in London with the French economy minister Bruno Le Maire yesterday.

Mr Le Maire said that he wanted a fair Brexit deal – but insisted it could not cover financial services. 'We need a good deal,' he said.

'But once again we have to avoid any misunderstanding between the British people and the French people, between the UK and the EU.

'Financial services cannot be in a free trade agreement, for many reasons – for reasons of stability, for the sake of supervision because there are some very specific rules for financial services.'

The Chancellor told the EU it is 'very much in our mutual interest' to strike a trade deal giving extensive rights to Britain's financial services sector (pictured is the heart of London's financial district)

The European Parliament's chief Brexit negotiator, Guy Verhofstadt, yesterday warned Britain's economy would suffer if it moved away from EU rules.

Speaking after talks in Downing Street, he said: 'If the UK stays very near to the rules of the European Union that will secure jobs in Britain. That will be the best way forward for the British economy.

'My preferential choice would be that Britain still is part of the single market, still is part of the customs union, then most problems would be solved.'

MPs will warn today that trade deals with around 70 countries could be put at risk unless the Government obtains legally watertight guarantees that they can continue after Brexit.