The EU has effectively handed Spain a veto over the future of Gibraltar in its Brexit negotiating guidelines.
The negotiating principles from the European Council stipulate that any future trade deal between the EU and the UK will not apply to the British territory – unless it is agreed by Spain.
The move will inflame already high tensions over the status of ‘the Rock’, which has been held by the UK since 1713 and is home to UK military bases.
The clause was included in the negotiating strategy set out by the European Council on Friday, which also said that the UK must settle its Brexit bill and agree the future of EU citizens in the UK before trade deal talks could start.
It says: “After the United Kingdom leaves the Union, no agreement between the EU and the United Kingdom may apply to the territory of Gibraltar without the agreement between the Kingdom of Spain and the United Kingdom.”
Unless Theresa May is prepared to sacrifice the future of Gibraltar’s 30,000 inhabitants to secure a good deal for the rest of the UK then she could have to make concessions to Spain.
It hands Spain, which has long held ambitions to reclaim sovereignty of the territory, significant power over Gibraltar’s future.
Liberal Democrat foreign affairs spokesman Tom Brake urged the Prime Minister to act to protect the people of the territory.
He said: “Confirmation that Gibraltar’s future must be agreed by the UK and Spain shows just how damaging the Government’s hard Brexit will be on this strategically important British territory.
“Theresa May must urgently produce a plan that protects the citizens of Gibraltar, including their businesses and communities.
“It is our obligation to support our overseas territories, and any attempt to brush off the importance of this issue is a dereliction of duty by the Government.”
Some 96% of Gibraltar’s citizens voted to remain in the EU.
In 2002, they also voted to reject the idea of shared sovereignty between the UK and Spain.
Shadow foreign secretary Emily Thornberry said: “The issue of Gibraltar is clearly a difficult and thorny issue, but the truth is the people of Gibraltar want to remain British and they should do.”
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