BRUSSELS has set itself on a collision course with Britain after diplomatic sources made clear the EU27 would fight any attempt by the UK Government to renegotiate fishing quotas in British waters during the two-year transition period following Brexit.

EU diplomats believe the UK should remain governed up to March 2021 by the Common Fisheries Policy, which gives member states fishing rights between 12 and 200 nautical miles off the UK coastline, but it should have no role in deciding the size of catches elsewhere in Europe.

The suggestion will be anathema to the Scottish fishing industry, which insists a “nine-month bridge” is all that is required for transition from March 2019.

Given that quotas are set in December for the following year, then a two-year transition would mean the CFP would still apply to the UK for two years and nine months up to December 2021.

Late last year, it was reported that Brussels had climbed down on the issue of the transition period, accepting Britain would not have to sign up to EU-imposed fishing quotas as part of a transition deal. The latest claim out of the Belgian capital contradicts this.

Michael Gove, the Environment Secretary, has confidently declared the UK would “take back control” of its waters after Brexit by exiting the CFP.

But one EU diplomat noted: “We notice Gove hasn’t repeated that recently. Perhaps he has been reined in because it isn’t going to happen.”

Gerard van Balsfoort, who chairs the European Fisheries Alliance, which lobbies on behalf of EU fishermen in the Brexit negotiations, said he was confident the UK would not succeed in persuading the EU27 to change its position in the coming months.

But Bertie Armstrong, Chief Executive of the Scottish Fishing Federation, said it would be “absolutely unacceptable” for the UK to be kept in the CFP framework during the two-year transition period.

Theresa May has made clear Britain will leave the CFP in March 2019 but the Prime Minister has told MPs that what happens during the transition period will be “part of the negotiation of that period”.

Meanwhile, research suggested a no-deal hard Brexit could cost the UK half a million jobs and £50 billion less investment by 2030.

The study for Sadiq Khan, the London Mayor, warned of a "lost decade" of significantly lower growth.

In London alone, it said there could be 87,000 fewer jobs and the UK capital's economic output could be two per cent lower by 2030 than predicted under the status quo.

But the report suggested London's economy would suffer significantly less from Brexit than the rest of the UK with economic output across the rest of the country up to 3.3 per cent lower by 2030 than it would be if Britain were to remain in the single market and customs union.

Mr Khan said: "This independent analysis reveals the potential economic risks - and human costs - at stake in the negotiations. If the Government continue to mishandle the negotiations, we could be heading for a lost decade of lower growth and lower employment.”

He added: "The analysis concludes that the harder the Brexit we end up with, the bigger the potential impact on jobs, growth and living standards. Ministers are fast running out of time to turn the negotiations around.”

Labour’s Ian Murray, speaking on behalf of Open Britain, which campaigns for closer ties to the EU, noted how the research said the economic damage done by leaving the single market and customs union would be “’noticeably more severe’ in Scotland and in the rest of the UK outside of London”.

The Edinburgh MP added: “Brexit will make regional inequalities across the UK much worse and could lead to London sucking in even more regional growth. This could cost Scotland investment, good jobs and opportunities.

“To avoid the most destructive effects of Brexit in Scotland, staying in the single market and the customs union is an absolute necessity.”