Brexit negotiations are not going the way the UK had hoped, the former Bank of England governor Lord King has said as he urged the Government to make clear it has a viable plan to walk away from the talks.

Lord King said Brussels needed to know that Britain was prepared for a “no deal” scenario.

He said a “separate team” should be tasked with drawing up a blueprint for such an eventuality to show the EU that the UK is ready to leave the bloc without agreeing to new trading arrangements.

Lord King said withdrawing from the EU without a deal would not be the UK’s “first preference” but that it needed to be seen as an option in order for Britain to negotiate effectively.