'It will be severe!' Merkel's election rival says 'hard' Brexit will DEVASTATE UK economy

Mr Schulz, leader of the Social Democratic Party of Germany, said businesses would move their services out of the UK as a result of its decision to leave the single market and customs union.

His comments come as Theresa May flies to Japan for trade talks on Wednesday.

Speaking as part of a report on the Today programme, on BBC Radio 4, the former President of the European Parliament, said Japanese companies based in the UK would suffer from hard Brexit.

He said: “If the UK falls out hard, that would mean that companies would focus even more on looking for a new location, perhaps even moving the headquarters, their services out of the UK.

“That would be a very severe situation, not just for Japanese companies but also for the UK economy.”

A senior Japanese government official has said the country wants Britain’s exit from the European Union to be predictable and transparent so that its businesses can continue to operate smoothly in the UK.

The UK has long been heralded as the second most important destination for Japanese investment after the United States.

Now Japan’s Deputy Chief Cabinet Secretary Yasutoshi Nishimura said the government would do its utmost to gather information on the Brexit negotiations, which he said remain “fluid”.

He also spoke of the government’s desire to support Japanese corporate activity in the UK.

Mr Nishimura said: “The Japanese government must react to a sense of crisis among businesses and do the utmost to gather information and analyse it, and support Japanese firms based on the recognition that Britain’s exit from EU has a direct impact on them.”