Britain's Brexit Secretary David Davis has claimed the European Union was "unwise" to publish a paper containing proposals to sanction Britain during any Brexit transition period.

In the first major bust-up regarding the next stage of negotiations, Mr Davis complained the proposals were "not in good faith".

He said the talks were meant to be about "building a bridge" but instead, he claimed, Brussels had come up with a "political document" that "is not the aim of this exercise".

Mr Davis was responding to a draft EU paper that suggested suspending Britain's access to the single market in the event of a dispute between the two sides during the transition.

Negotiators agree there should be an "implementation period" of about two years - but that the UK's formal membership will expire when Article 50 runs out in March 2019.

Mr Davis said on Thursday: "I do not think it was in good faith to publish a document with, frankly, discourteous language and actually implying that they could arbitrarily terminate in effect the implementation period.

"That's not what the aim of this exercise is, it's not in good faith and we think it was unwise to publish it."

He also played down the British government's own leaked impact assessment that showed regions in the UK could suffer a hit to its Gross Domestic Product (GDP) of up to 16% over 15 years.

The document speculates that Northern Ireland's GDP could take a 12% hit in the event of a 'no deal' Brexit.

The same document claims Britain's retail sector could be hit by a 20% rise in costs after Brexit - while car makers could see a 13% rise in manufacturing costs outside the EU.

The forecast impact of Brexit on every industrial sector of the British economy, seen by broadcaster Sky News, reveals the estimated added costs to UK companies.

So-called non-tariff barriers as a result of leaving the EU have also been calculated to add as much as 16% in costs in the food, drink, defence and education sectors.