“Ambitious” EU free-trade deal achievable if agreement on divorce bill, EU migrant rights and Northern Irish border reached

The EU’s top negotiator has warned a trade deal will not be reached if the Tories use Brexit to slash workers’ rights, corporation taxes and environmental protections.

An “ambitious trade agreement” was possible, said Michel Banier, but only if the EU and the UK can achieve accord on Britain’s EU “divorce bill”, the rights of European citizens living in the UK and the border between the Republic of Ireland and Northern Ireland.

However, Banier was clear that a deal could only be reached “provided that it ensures fair competition and guarantees high environmental, social and consumer protection standards”.

The warning reflects worries on the continent caused Theresa May’s threat to turn the UK into a deregulated tax haven after Brexit.

This weekend the Independent revealed that former minister Micheal Gove is set on scrapping EU clinical trial rules for novel drugs and legislation that prevents construction near wildlife reserves.

While the Prime Minister has pledged to retain existing workers’ rights, she has refused to make the promise legally binding.

Writing in the Financial Times, Barnier, who is the European Commission’s head Brexit negotiator, said that the UK and the EU would first need to agree exit terms before talks on a trade deal could begin.

He stated: “This means agreeing on the orderly withdrawal of the UK before negotiating any future trade deal.

“The sooner we agree on these principles, the more time we will have to discuss our future partnership.”

Banier warned that the prospect of the talks collapsing was “a distinct possibility” that would result in “severe consequences”. He said that such a breakdown would “undoubtedly leave the UK worse off”.

He emphasised that the rights of EU and British citizens living abroad would be dealt with from “day one” and said that the UK must agree to pay a leaving bill to cover commitments it has already signed up for – estimated by the EU to be around £50bn.

Barnier was also clear that the EU would “not stand for anything that weakens dialogue and peace in Northern Ireland.”

He said: “If we cannot resolve these three significant uncertainties at an early stage, we run the risk of failure. Putting things in the right order maximises the chances of reaching an agreement.”

Theresa May will trigger Article 50 to begin the formal Brexit negotiations tomorrow.