Will be pushed around outside EU

have to “pay a price” for a China deal, and will not “make a dent” in China’s heavily protected financial industry.

Mr Hogan said: “Outside the EU, ‘Global Britain’ is much smaller, with less to offer its trading partners and less strength to resist partners’ demands. The simple reality in international trade is that size — and distance — really does matter.”

Mr Hogan also warned the UK that a future trade deal with the EU will not live up to expectations, particularly on financial services. “Even the best possible free trade agreement with the EU will fall far short of being in the single market,” Mr Hogan said. “This fact is simply not understood in the UK.”

The Cabinet’s Brexit sub-committee was meeting today to discuss the UK’s future relationship with the EU.

Downing Street has ruled out remaining part of the EU’s customs union, which sets common tariffs and trade deals. The Government has also pledged to leave the single market, which sets common standards and ensures the free flow of people, capital and goods.

The EU fears that a post-Brexit Britain — potentially under pressure from larger trade partners — will scrap tax, environmental or labour standards in order to undercut its continental competitors.

EU diplomats last week insisted they would seek to insert “substantive provisions”, including sanctions, in a future trade deal, to prevent a lowering of standards.

Any divergence from EU rules would also affect a future agreement on the Irish border. In December the Government pledged to avoid a hard border, even if there is no Brexit deal. EU sources say lawyers are struggling to put that deal into legal language.