EU’s chief Brexit negotiator says key Tory aim of leaving single market and maintaining “frictionless trade” is impossible

It is impossible for Britain to have “frictionless trade” with the European Union if it leaves the single market, the EU’s chief Brexit negotiator has warned.

Michel Barnier said the ramifications of leaving the single market and the customs union had not been “fully understood” by Theresa May’s government.

The Prime Minister, along with Brexit secretary David Davis and Chancellor Philip Hammond have all stated that they want to exit the single market and have a customs deal that provides “frictionless” trade.

Speaking at the European Economic and Social Committee in Brussels, Barnier said the UK will be “a third country” after Brexit and told businesses to prepare for uncertainty.

He said: “I have heard some people in the UK argue that one can leave the single market and keep all of its benefits – that is not possible.

“I have heard some people in the UK argue that one can leave the single market and build a customs union to achieve ‘frictionless trade’ – that is not possible…

“Business should assess, with lucidity, the negative consequences of the UK’s choice on trade and investment. And prepare to manage them.”

Banier reiterated the EU’s three “red lines” for belonging to the single market: the free movement of people, goods, services and capital, no “sector by sector” single market participation and European Court of Justice oversight.

The Tories’ Brexit policy is to stop free movement, no longer recognise the ECJ and strike sectoral free trade agreements – all of which discount frictionless trade, said Barnier.

He said: “These three points were already made clear by the European Council.

“But I am not sure whether they have been fully understood across the Channel.”