Chancellor Philip Hammond said on Wednesday that the UK would negotiate a "unique" Brexit agreement which includes financial services, just hours after EU negotiators rejected the possibility of such a deal.

"It is possible to include financial services within a trade deal but that it is very much in our mutual interest to do so," Hammond said.

Hammond's speech comes within hours of European Council president Donald Tusk saying such a deal was "out of the question".

LONDON — Philip Hammond called on Wednesday for a "unique" Brexit agreement which includes financial service, just hours after EU negotiators rejected the possibility of such a deal.

In a major speech, the Chancellor criticised "sceptics" who believe such an agreement is impossible because a similar one doesn't currently exist.

"To them, I say: 'Every trade deal the EU has ever done has been unique.' The EU has never negotiated the same arrangement twice," Hammond told an audience at HSBC's London headquarters on Wednesday afternoon.

"This is a negotiation where both sides will need to give and take," Hammond insisted.

However, less than two hours before Hammond got to his feet, European Council president Donald Tusk said such a "unique" deal was "out of the question."

Speaking at a press conference in Luxembourg, Tusk insisted that the EU could not "agree to grant the rights of Norway with the obligations of Canada."

He added that "a pick and mix approach for a non-member state is out of the question. We are not going to sacrifice these principles. This is not in our interest,"

Despite this, Hammond insisted that Tusk's comments do not "reflect the reality of today" which is that the UK will have identical regulations to the EU on the day after Brexit.

"Our economies, including in financial services, are interconnected ... our regulatory frameworks are identical ... and our businesses and citizens depend on cross-border financial services trade in their day-to-day lives."

He added that "Its hard to see how any deal that did not include services could look like a fair settlement… It is very much in our mutual interest to do so."

Hammond said the EU were "skilled negotiators" but would end up in a more flexible position than Tusk's comments suggested.

"The EU is a very skilled negotiator," he said.

"They've done this many times. They've negotiated agreements with many countries. It doesn't surprise me remotely that what they've set out this morning is a very tough position. That's what any skilled negotiator would do."

He also cited the precedent of the TTIP deal with the US as an example of where the EU has been willing to be flexible in order to reach a deal.

"The EU itself pursued ambitious financial services co-operation in its proposals for TTIP – which it described as a partnership that would be: ‘more than a traditional free trade agreement'" Hammond said.

However, Labour pointed out that TTIP negotiations had ultimately collapsed.

"The Chancellor has shown his hand, and it is clear he is looking for a TTIP type deal as his blueprint," Labour's shadow chancellor John McDonnell said.

"Yet those negotiations took nearly four years and collapsed..."

"The only remaining possible model is a free trade agreement"

Hammond's speech came hours after the EU flatly rejected Theresa May's approach to Brexit negotiations, publishing guidelines which said only a basic free-trade agreement was possible if the government sticks to its "red lines."

The guidelines confirmed that the EU will start working towards an agreement similar to its trade deal with Canada, which contains minimal provisions for financial services and would mean UK banks had limited access to the single market.

In a speech which accompanied the publication of the guidelines, EU Council president Donald Tusk said "it should come as no surprise that the only remaining possible model is a free trade agreement."

"I hope it's ambitious and we'll do our best. But it will only be a trade agreement," he added.

His comments echo those of other EU officials, who say the UK's preferred system of "mutual recognition" is unworkable. A senior adviser to Michel Barnier told an audience on Monday that "mutual recognition has failed."