The UK has been warned that any new free trade agreement (FTA) with the European Union is likely to be more limited than British negotiators may have hoped.
In an interview with European newspapers, the EU's chief Brexit negotiator Michel Barnier said that Britain's intentions to form a new bespoke trade deal with Europe after Brexit need to be tempered by a realization of what the UK will inevitably lose as a result of its decision to quit the single market.
Prime minister Theresa May and Brexit secretary David Davis have spoken on a number of occasions of their desire for an FTA that is broadly similar to the EU's trade pact with Canada, but with the addition of a number of extra benefits and allowances, including a special dispensation for British banks and financial firms to keep the passports that allow them to trade freely in the EU.
Mr Barnier dismissed this idea out of hand, saying: "There is not a single trade agreement that is open to financial services. It doesn't exist."
He added that this outcome was a consequence of "the red lines that the British have chosen themselves. In leaving the single market, they lose the financial services passport".
However, the EU minister remained more open to the idea of a continued close relationship with Britain in areas such as judicial cooperation, defence and security, and aviation. These topics are likely to be key points of discussion when the next round of major talks gets underway in March 2018.
Mr Barnier also noted that any 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. The UK will be able to negotiate new trade agreements with the rest of the world during this transition, but these would not be able to come into force until after Brexit has been finalized.