Donald Tusk’s letter setting the terms for negotiating the UK’s departure from the EU was the moment when Theresa May’s rhetoric collided with reality, according to a string of politicians who have been warning against a hard Brexit.

Chris Leslie, the former shadow chancellor, said the letter by the president of the European council marked the emergence of “the cold, hard realities of modern international trade and diplomacy after all the talking to ourselves for the last nine months”.

He said some of the worrying aspects were “ruling out staying in the single market, and the no-go on sector-by-sector deals and the ban on trying to go round the commission to different heads of state is a pretty firm message, almost like they are going to police it”.

Tim Farron, the Liberal Democrats’ leader, whose party is leading the political fight against Brexit, said: “The terms are clear: no sector-by-sector deals, no bilateral negotiations and no new trade deal until the withdrawal terms are agreed. This leaves no doubt that David Davis’s comments about special arrangements for the car industry or financial sector are worthless.”

A number of Conservatives were also concerned about the surprise mention of Gibraltar in the draft guidelines, making clear that any future arrangement would not apply to the rock unless agreed by both Spain and Britain. Bob Neill, a Tory MP and former minister, said: “It is the type of thing you might expect in terms of their start position. But just proves the so-called hard Brexiteers who thought this might be simple are in for a pretty tough reality check.”

Neill called on the prime minister to “make it very clear from the beginning that the sovereignty of Gibraltar is not on the table”. He said: “Gibraltar has friends in the UK parliament who will make it abundantly clear that there cannot be any trading of sovereignty and Gibraltar cannot be collateral damage or used as a bargaining chip,” pointing out it would not be in Spain’s economic interest to frustrate frictionless trade.

Andrew Rosindell, the Conservative vice-chair of the all-party parliamentary group for Gibraltar, said “there can be no agreement” with Gibraltar on the table. “British people must and will stand together,” he said. “We cannot be bullied by Spain. Any agreement must apply equally to the whole British family and that includes Gibraltar. There can be no compromise on this.”

However, No 10 and many Brexit campaigners were relatively sanguine about the proposals from Tusk, suggesting the conditions could have been much worse. Inside Downing Street, the mood was relatively relaxed about the response to May’s opening gambit, with senior figures saying there were “no surprises really” and that the overall tone was good.

The response from Jeremy Corbyn, the Labour leader, was also calm, welcoming Tusk’s decision to “soften the EU’s opposition to talks on trade taking place before the terms of withdrawal are agreed”.



Business groups appeared to be reserving judgment, with the CBI saying there were early signs negotiations would head down the right path but the group wanted to see certainty on the future of EU citizens in weeks not months. “Discussions on new trading arrangements should go hand-in-hand with negotiating the UK’s exit from the EU. We want this to happen as soon as possible, which is why the next six months are crucial,” said Josh Hardie, CBI director general.

But leading figures in the Brexit campaign were confident the letter showed the EU had moved to a place where it was keen to make a deal. “This demonstrates that they are far more flexible about this than was originally supposed and tells us that Germany is becoming much more influential,” said Iain Duncan Smith, the former cabinet minister. “So it now looks like they are asking themselves the question, ‘how do we reach an agreement?’ rather than, ‘how do we punish them?’ That is the shift in tone. They are searching for the overlapping self-interest that defines the final agreement.”

Duncan Smith said it seemed that the German chancellor, Angela Merkel, was taking control behind the scenes. “They don’t want a Mexican standoff,” he said.

Michael Fabricant, the Tory MP and former party vice-chair, said that even as a “fervent Brexiteer” he was “not disappointed by Tusk’s pragmatic approach to negotiations”.

He said: “Contrary to early reports, he did not say that divorce negotiations must be completed before trade negotiations begin. Far from it. He simply said they must be under way first and that trade talks could begin as early as this autumn. I’m confident, given Germany’s statements of the need for free trade between the UK and EU, that a deal will be reached in advance of our leaving in 2019.”

However, others had more mixed feelings, saying negotiation would still be difficult. John Penrose, a Conservative MP who campaigned to remain but has since joined the party’s pro-Brexit European research group, said there was also a tough message from the EU.

“It’s great to see Tusk veto punishing the UK for leaving, and agree trade negotiations should begin before the article 50 process is complete,” he said. “But even though he’s set a businesslike and constructive tone, Brussels will still negotiate hard. That’s why they’re demanding €60bn [£51bn] alimony for the divorce,” he said. “We shouldn’t let their pressure get to us; both sides have a lot to gain from a successful deal, but a huge missed opportunity if it doesn’t happen too.”

The most hardline of Brexiters used some of the letter’s toughest demands – on a financial settlement and the timing – to argue that the UK should be prepared to walk away without a deal. “By putting the divorce settlement first, the EU are breaching their legal obligations under article 50,” said Richard Tice, co-chair of the Leave Means Leave campaign. “If the EU refuse to comply with law during negotiations, Britain should walk away from the table until Brussels come to their senses.”