THERESA May knew that the Leave campaign had broken the law when she triggered article 50, her lawyer has revealed.

The confession came in response to a high court challenge to the Brexit vote being pursued by British citizens living in France, Italy and Spain.

The expats want to stop the UK leaving the EU, and went to the courts after the Electoral Commission found “beyond a reasonable doubt” that Vote Leave and BeLeave broke the law during the 2016 referendum campaign by exceeding spending limits.

They argue that the conduct of the Brexit backing campaigners should nullify the result.

But May’s lawyer says their argument is “unsustainable”.

In his submission to the court, which was released by the Brits abroad, Joseph Barrett of 11KBW chambers says: “At the time the decision to give article 50 notice was taken, it was a matter of public record that campaigners may have breached campaign finance requirements, and other requirements, during the EU referendum campaign.

“The contention that the decision to give article 50 notice was founded on a premise that there had been universal compliance with those requirements is therefore incorrect and unarguable.”

He added: “Allegations that there had been breaches of campaign finance limits etc during the EU referendum campaign were a matter of public record at the date of giving article 50 notification, and it was also a matter of public record that such allegations were being investigated by the Electoral Commission (and might be found to be made out).”

Commenting on the government’s response, Sue Wilson, the lead claimant and chair of Bremain in Spain, said: “We must be able to trust in the democratic process and to be sure that votes and power can’t be bought. If the Prime Minister was aware of the allegations of cheating during the referendum at the time she sent her letter giving notice for the UK to withdraw from the EU – as appears to be the case here – she needs to be held accountable.”

Meanwhile, Michel Barnier, the EU’s chief negotiator said there was a “realistic” chance Britain could agree a Brexit deal with Brussels in the next two months. The Frenchman’s comments sent the pound soaring.

Sterling jumped to a five-week high of $1.31 on the report, up around 1% on the day, and rose around 0.5% against the Euro.

Barnier told a forum in Slovenia: “I think that if we are realistic, we are able to reach an agreement on the first stage of this negotiation – which is the Brexit treaty – within six or eight weeks.”

He added: “Taking into account the time necessary for the ratification process – the House of Commons on one side, the European Parliament and Council on the other side – we must reach an agreement before the beginning of November.

“I think it’s possible.”

Barnier said: “We can regret this vote but we have to respect it because it was a democratic decision and we have to implement it.”

He added “we are not far from agreement”, with 80% to 85% of issues already in common ground between the UK and Brussels, and “we want a deal”.

That follows reports that the remaining 27 EU leaders are poised to announce an extraordinary Brexit summit to take place in mid-November, giving Barnier and May a little more time to secure a deal.

That deal, however, is still dependent on the Prime Minister backing down over the Irish border.

The negotiators’s comments came 200 days before the UK is due to leave the EU and in the middle of a Tory civil war over Britain’s future relationship with Brussels.

Former Brexit minister Steve Baker even warned May that 80 of her MPs are willing to vote down the Chequers plans and that she risks splitting her party: “If we come out of conference with her hoping to get Chequers through on the back of Labour votes, I think the EU negotiators would probably understand that if that were done, the Tory party would suffer [a] catastrophic split,” he said.