DAVID Davis has accused Brussels of displaying bad faith over its leaked position paper that suggested the EU27 could punish Britain with sanctions during the two-year transition period.

Emerging from a two-hour meeting with senior colleagues in Downing Street on the UK Government's withdrawal strategy, the Brexit Secretary commented on this week's leaked EU27 position paper, which suggested if the UK failed to comply with EU law during the transition period, then it could be sanctioned, including losing access to the single market.

Pointing out the document was political rather than legal, the Secretary of State noted: “What we’re about is building an implementation period; which is to build a bridge to a future where we work well together. I do not think it was in good faith to publish a document with frankly discourteous language and, actually, implying that they could arbitrarily terminate in effect the implementation period.

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“That's not what the aim of this exercise is; it's not in good faith and it's unwise to publish that,” he declared.

Having discussed the issue of immigration and Northern Ireland on Wednesday, ministers at a second meeting of the so-called Brexit "war Cabinet" debated the way forward on trade and the future relationship with the EU.

“I’m not going to give you a detailed blow-by-blow of a Cabinet committee; that obviously never happens,” explained Mr Davis but he went on: “Very constructive, a lot of things resolved.

“Bear in mind, we’ve already got a very, very strong framework of what we want to achieve; that is, an overarching free trade agreement and large numbers of components of what we want to achieve within that, a customs agreement and so on, and we were fleshing that out. But you’ll hear more about that from the Prime Minister in due course I’m sure.”

He said that some progress still had to be made but “a great deal” had already been made.

On the leak of the Government’s draft analysis, which suggested every part of the UK would lose out economically from Brexit – with Scotland losing nine per cent of its growth, around £15 billion, in a no-deal scenario – Mr Davis stressed how every financial forecast has so far been proved wrong; “massively wrong”.

“The second point is that this is a work in progress; this is not an approved policy document. I’ve actually said we will publish before Parliament makes a decision on the final deal - we’ll publish the economic estimate - but there will be properly completed economic estimates.

“You wouldn't drive a car that’s half finished; you wouldn’t use a forecast that’s half completed,” he insisted.

The Secretary of State added: “Thirdly, that work in progress didn’t use, didn’t assess what our actual aim is; our policy aim. It assessed other things that might look a bit like it but are not like it and we intend to publish something at the end of this exercise which shows precisely what we want to achieve, which is: progress for Britain.”

In other developments:

*Theresa May told senior bosses of 20 Japanese businesses at a Downing Street roundtable that Brexit was "no small undertaking" but would allow the UK to forge a free trade deal with Japan.

Koji Tsuruoka, Japan’s ambassador to London, said manufacturing firms in particular "expected" free access to the European market to continue.

*Billionaire investor George Soros has donated £400,000 to the Best for Britain anti-Brexit campaign.

*Tory MP Nicky Morgan, who chairs the Commons Treasury Committee, has demanded the Government release its Brexit paper on the financial services industry, saying to withhold publication only adds to the “chronic state of uncertainty” for the sector.