EUROPE has told Theresa May to lower her expectations for a post-Brexit trade free trade agreement and prepare for “negative economic consequences”.

European Council president Donald Tusk unveiled the draft guidelines he wants EU negotiators to work to when they start discussing a future trade deal with the British – and knocked back just about every demand coming from Downing Street.

The guidelines commit the team from Brussels to working towards “as close as possible a partnership” with the UK.

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However, Tusk warns that this closeness will be limited by the “repeatedly stated positions” of the Tory government in London.

“Being outside the customs union and the single market will inevitably lead to frictions”, the document warns.

“Divergence in external tariffs and internal rules as well as absence of common institutions and a shared legal system, necessitates checks and controls to uphold the integrity of the EU single market as well as of the UK market.

“This unfortunately will have negative economic consequences.”

The guidelines reaffirm the EU’s long-held position that as a non-member Britain “cannot have the same rights and enjoy the same benefits as a member”.

The document also warns there can be “no cherry-picking” of participation in the single market for particular sectors, such as financial services.

Tusk said the proposals on the future relationship showed “we do not want to build a wall between the EU and Britain” after Brexit.

He said: “On the contrary, the UK will be our closest neighbour and we want to remain friends and partners after Brexit – partners that are as close as possible, just like we have said from the very first day after the referendum.”

But he added that May’s “red lines” of pulling the UK out of the single market, customs union and jurisdiction of the European Court of Justice left only the option of a future relationship based on a free trade agreement like that signed with Canada.

“I hope that it will be ambitious and advanced and that we will do our best, as we did with other partners such as Canada,” said the European Council president.

“I propose we aim for a trade agreement covering all sectors and with zero tariffs on goods,” said Tusk.

“Like other FTAs, it should address services, and on fisheries reciprocal access to fishing waters and resources should be maintained.

“This positive approach doesn’t change the simple fact that because of Brexit we will be drifting apart.”

Tusk noted how this would be the first time in history that two countries had sat down to negotiate how they could “loosen economic ties”.

“I fully understand and of course I respect Theresa May’s political objective, to demonstrate at any price that Brexit could be a success and was the right choice.

“But sorry, it is not our objective.”

The Prime Minister’s official spokesman said: “We look forward to seeing the final guidelines when published and hope they will provide the flexibility to allow the EU to think creatively and imaginatively about our future economic partnership.”

Scottish Brexit minister Mike Russell said it was clear the UK government were not going to come out well from talks.

“The draft guidelines which have emerged today make clear that the UK will lose out from Brexit and be worse off as a result,” he said.

“They also show that the UK Government red lines mean the only option available to the UK is a Free Trade Agreement and make it clear that being outside the European Single Market and Customs Union will create friction – that is exactly why we will continue to make the case for continued membership.”

He added: “Whilst there are aspects of these guidelines where we shall be pressing the UK very hard not to make concessions, it is welcome that they recognise the importance of police and judicial cooperation in criminal matters and ensuring continuity of cooperation on security, defence and foreign policy.

“It is vital for all that we get these things right.”

He called for progress to give people and businesses “certainty”.