Michel Barnier rules out special Brexit deal for City of London

Britain cannot leave the European Union with a bespoke trade agreement for financial services, Michel Barnier has said.

The European Commission’s chief Brexit negotiator said the City would be forced to give up crucial passporting rights that allow firms to trade freely in the EU, as a result of the Government's decision to quit the single market.

He said Britain must “face the consequences” of Brexit and cannot “cherry pick” the benefits of the bloc after leaving. 

There is not a single trade agreement that is open to financial services. It doesn’t exist,” he told the Guardian.

He said the outcome came as a result of “the red lines that the British have chosen themselves. In leaving the single market, they lose the financial services passport.”

His comments come days after UK and EU negotiators agreed to progress to trade talks, while at home Cabinet began discussions of Britain’s Brexit aims.

The intervention will come as a blow to David Davis’ who has called for a "Canada plus plus plus" deal, which would include a special arrangement for banks.

Mrs May has insisted Britain will quit the European single market upon leaving the bloc in order to take back full control of Britain’s borders.

Elsewhere, Mr Barnier told European newspapers a trade deal could be agreed within a two-year transition period, but would have to be ratified by more than 35 national and regional parliaments.

He also said the UK could not halt the Brexit process unilaterally, with the backing of the other 27 member states needed.