EU leaked document indicates UK would face sanctions
The EU wants a 'mechanism' allowing it to 'suspend certain benefits' of single market.
A leaked EU document revealed on Tuesday that Brussels wants the ability to restrict the UK's access to the European Union's single market if the terms of a transition deal are breached.
The draft text setting out the terms for the transition after the UK leaves the bloc indicated the EU would have power to impose the punitive measures on Britain without a court judgment.
The text said there should be a "mechanism" allowing the EU to "suspend certain benefits" of single market membership during the transition period without necessarily having to resort to the European Court of Justice (ECJ).
The government played down the significance of the draft on Tuesday, insisting it would form the basis for a negotiation.
"This is a draft document produced by the EU that simply reflects their stated directives," a Department for Exiting the European Union spokesman said.
"The Secretary of State set out the UK's position in his speech in Teesside last month. Together these provide a solid foundation for the negotiations on the implementation period which have begun this week with the aim of reaching agreement by March European Council."
News of the leak came as Theresa May prepares to chair the Brexit "war cabinet" in sessions on Wednesday and Thursday.
The PM sidestepped questions about febrile Tory tensions, including a call for her to "sling out" hard Brexiteers by former Tory minister Anna Soubry.
- Brexit Minister sorry for spreading EU conspiracy theory
- Leaked Brexit analysis: Curbing migration to hit economy
- Anna Soubry tells Theresa May to 'sling out' Tory hard Brexiteers
May refused to answer a question on whether she would like vocal leavers, such as Boris Johnson and Jacob Rees-Mogg, to be more circumspect.
Soubry threatened to quit the party if the Brexiteers "take over" on Monday, ratcheting up pressure on the PM.
Asked if she would like Johnson and Rees-Mogg to "pipe down," May said: "The party and the Government are focused on one very clear act, thing that we have to do, which is what the British people asked us to do, which is to leave the European Union.
"Now we've set out a clear position in the Lancaster House speech, the Article 50 letter, the Florence speech, all of these show the same principles underpinning what we want to do when we leave the European Union, which is to ensure that we get a good deal for our trading in goods and services."
May is facing pressure to get the Cabinet to agree what it wants from Brexit and earlier Home Secretary Amber Rudd said she "hopes" the Government will be able to clarify its negotiating stance "within the next few weeks".
But Scottish First Minister Nicola Sturgeon demanded a role for her government and devolved administrations in Wales and Northern Ireland in influencing the war cabinet's deliberations on Britain's priorities.
Sturgeon told BBC Radio 4's Today programme: "It is overwhelmingly in my view in the interests of the country, our economy, to remain within the customs union and the single market."
Meanwhile, Rudd did little to quell concerns that proposals for a UK immigration system post-Brexit had been delayed, saying only that it was "likely" the plans would be set out before exit day in March 2019.