The revelation by an MEP on the Brexit monitoring group came as Michel Barnier attempted to bully Britain into remaining under EU control in the single market.
The EU’s chief negotiator claimed that there will be border checks on British goods and “no frictionless trade border” if the UK leaves the single market and customs union.
But the UK Government dismissed his threat as a “negotiating position”.
The panic in the cash strapped EU about a “no deal” outcome follows recent evidence from former British Chamber of Commerce director John Longworth that Britain would benefit by up £150billion a year even without a deal putting the UK in a very strong position for the negotiations.
The assault by the EU’s chief negotiator coincided with a push by Remainer groups in Britain, led by the CBI, to force Britain to stay in the single market and customs union for an extended period.
If this happens the UK will be forced to accept uncontrolled immigration from the EU, be ruled by Brussels bureaucrats through the European Court of Justice (ECJ), have to pay billions to the EU each year and be barred from having free trade deals with the rest of the world.
With a note of desperation, Mr Barnier insisted there was “no reasonable justification” for Britain crashing out of the EU without a deal, he said.
Speaking to the European Economic and Social Committee, he said: “I have heard some people in the UK argue that one can leave the single market and keep all of its benefits. That is not possible.
“I have heard some people in the UK argue that one can leave the single market and build a customs union to achieve frictionless trade. That is not possible.
“The decision to leave the EU has consequences and I have to explain to citizens, businesses and civil society on both sides of the Channel what those consequences mean for them.”
He said that the EU is ready for no deal but said it would mean “a return to the distant past”, with trade regulated by World Trade Organisation (WTO) rules which would impose tariffs on goods such as vehicles, food and drink.
In a further slight to Theresa May, Mr Barnier has agreed to have an “extended meeting” with Labour leader Jeremy Corbyn next week.
His ludicrous claims over free trade come despite the EU agreeing frictionless free trade borders with Japan yesterday and Canada last year.
Tory MEP David Campbell Bannerman, who sits on both the European Parliament’s Brexit monitoring group and trade committee, said that Barnier’s comments have come because the Commission is “running scared”.
He said: “They have realised that us walking out of the talks and not coming back is a serious possibility.
“There is nothing to be frightened of because the reality is that despite the rhetoric we are in a much stronger position than they are because of the trade deficit we have with the EU.”
He pointed to a report by the thinktank Civitas which showed that EU exporters would pay £13 billion in tariffs to the UK while Britain would be only liable for £5 billion to the EU.
He said: “We can easily compensate the £5 billion to companies exporting from Britain under WTO rules and their £8 billion would go to the Treasury to help fund our public services whereas at the moment import tariffs from outside the EU go to Brussels.”
He said: “Essentially they have come up with ridiculous demands on a 100 billion euro (£78 billion) exit fee and insisting the ECJ continues to have jurisdiction in Britain so it has made us walking away from the talks much more likely.
“People in Brussels are just waking up to the fact that the UK Government is serious about walking away.”
He added that privately some countries particularly Germany and Ireland are “panicking” about there not being a free trade deal with the UK because it is their biggest market for cars and other products.
The Prime Minister’s spokesman said: “Obviously we are just at the beginning of the negotiations but I would say that the most frictionless possible trade between the UK and the EU is clearly in the interests of both sides.”
He added: “It isn’t new that some on the EU side have strong feelings about the decision the British people took last year but the UK Government is focused on getting the best possible deal for our whole country and a deep and special partnership that’s in the interests of the whole continent.”
In what seemed to be a pincer movement with the EU, the CBI yesterday led Remainer calls for Britain to stay in the single market and customs union for an extended period.
This followed lobbying of MPs by former Prime Minister David Cameron to push for a “Norway option” of leaving the EU but staying under Brussels rule in the single market
CBI director-general Carolyn Fairbairn said: “Instead of a cliff edge, the UK needs a bridge to the new EU deal.
“Our proposal is for the UK to seek to stay in the single market and a customs union until a final deal is in force. This would create a bridge to the new trading arrangement that, for businesses, feels like the road they are on.”
But critics pointed out that the CBI featured in the Remain campaign’s project fear during the referendum and suggested it has been seeking ways of unpicking the referendum result.
Richard Tice, co-chairman of Leave Means Leave said: “It would appear that the CBI is attempting to kick Brexit into the long grass in the hope that it will not happen.
“This is a subtle attempt to deny Brexit through detail and is conning the will of the people.
The push by Remainers to keep Britain in the single market was also made by former foreign secretary William Hague.
He told a House of Lords committee that Brexit will “undoubtedly” damage the UK’s ability to exert influence in foreign affairs and international security.
July 7th, 2017: Express