Tusk rejects May's plan for early twin-track talks on withdrawal and trade

Unlike some of his colleagues, who have insisted any trade talks must wait until after Brexit, Mr Tusk indicated they could begin if there was “sufficent progress” on withdrawal. He even suggested the talks on Britain’s future relationship with the EU27 could start in the autumn.

Brexit-watchers saw the EC President’s reference as an opening gambit and an oblique reference to securing agreement on Britain’s "divorce bill," which some have put at £50 billion.

No 10 emphasised that his published negotiating guidelines for Brussels’ Brexit strategy were just a “draft,” which had still to be agreed by the 27 member states.

"It is clear both sides wish to approach these talks constructively and, as the Prime Minister said this week, wish to ensure a deep and special partnership between the UK and the European Union," said a spokesman.

Boris Johnson, the Foreign Secretary, echoed the sentiment, saying Mr Tusk’s statement showed "a lot of goodwill, a lot of willingness to achieve what the Prime Minister has said she wants to achieve, which is an orderly transition...”.

But the Leave lobby suggested Mrs May should "walk away from the table" if Brussels refused to talk about trade alongside the divorce settlement.

Meantime, pro-EU campaigners argued that the EC President had asserted Brussels’ authority over the talks and showed the hard reality the UK Government faced as it prepared to negotiate.

Tim Farron, the Liberal Democrat leader, said Mrs May had been "taken to Tusk" as the guidelines showed "the strength of the EU in these negotiations and the carelessness of the UK Government in isolating themselves from our European allies".

Labour’s Owen Smith, a leading supporter of the Open Britain campaign, said: "Two days into a two-year negotiation and the Government's lofty rhetoric is colliding with hard reality. The Prime Minister's plan for Britain is a pipe dream."

Unveiling the draft negotiating guidelines, the EC President insisted Brussels would take a "constructive" approach and wanted to keep the UK as a "close partner" on trade and security in the future.

Speaking in Malta, Mr Tusk predicted withdrawal negotiations would be "difficult, complex and sometimes even confrontational".

A first phase would seek to disentangle Britain from its commitments and ties with the EU and resolve the status of expatriate citizens, before moving on to a second phase establishing the terms of future EU-UK relations.

He said: "The EU27 does not and will not pursue a punitive approach. Brexit in itself is already punitive enough.

"After more than 40 years of being united, we owe it to each other to do everything we can to make this divorce as smooth as possible," he declared.

The former Polish Prime Minister rejected talk of a "Brexit bill", insisting it was a matter of "fairness" that the UK should make good on financial commitments it had entered into.

He dismissed suggestions Mrs May had attempted to use security co-operation as a "bargaining chip" by linking it to trade in her March 29 letter notifying Brussels of the UK's intention to quit.

Mr Tusk will visit London for talks with the PM ahead of an April 29 summit in Brussels, when the remaining 27 member states are expected to approve the guidelines, clearing the way for talks to begin in earnest.

In other developments:

*in wake of this week’s trade and security row, Mr Johnson insisted the UK's commitment to the defence and security of Europe was "unconditional" and that security would not be used as a bargaining chip in the talks;

*a report suggested Britain’s hospitality sector faced a post-Brexit recruitment crisis if door were closed to EU migrants and

*Chief Brexiteer Michael Gove, the former Justice Secretary, said he envisaged EU citizens would be able to "move freely" in and around UK post Brexit but they would not have work or welfare rights.