Greece has warned it will need more financial aid from Brussels in a 'no-deal' Brexit scenario, raising the spectre of bitter EU in-fighting over money.

In a move that hands potential leverage to British negotiators, Athens has warned that the financial fallout from a no-deal Brexit would leave the country facing “increased financial and political instability” if there was a shortfall in the EU budget up to 2020.

The warnings in a Greek government working paper point to the potential backlash that would be caused by a British crashout which would leave an immediate £10bn-a-year black hole in EU finances.

Dominic Raab, the new Brexit secretary, warned last month that the £40bn so-called ‘Brexit bill’ will not be paid out if the European Union fails to agree a trade deal with Britain.

The EU’s budget commissioner has warned that Europe will need to find an extra £20bn a year after Brexit if it wants to plug the gap left by the ending of UK financial contributions and invest in ambitious new plans for defence and border protection.

Although Brussels remains adamant it is prepared for a ‘no deal’ Brexit, the Greek warnings point to the pressures poorer member states would faced if the UK decided to go for a clean-break Brexit.