BRITAIN could seek a deal with Europe that would allow individual sectors of the economy to remain in the EU's customs union after Brexit, an international trade minister has suggested.

Greg Hands said that the UK would not face a "binary" choice between remaining within or moving outside the customs union when it came to negotiate its withdrawal from the EU.

Members of the customs union - which covers not only the 28 EU states, but also Turkey, Monaco, San Marino, Andorra and non-EU UK territories such as the Channel Islands - enjoy free trade with one another but must impose the same tariffs on goods arriving from outside the area, and are barred from doing bilateral trade deals with other countries.

Speaking to Bloomberg, Mr Hands suggested that the UK could be selective about which sectors of the economy it wished to be covered by the arrangement.

"You can choose which markets, which products the customs unions affect and which they don't, so there isn't a binary thing of being inside the customs union or outside of the customs union," explained the international trade minister.

"The history of international trade has got all kinds of examples of customs unions," he said.

His comments will further aggravate the Scottish Government, which believes that if sectors are to be allowed to cut special terms, so too should Scotland.

Earlier and in another indication that the broad terms of the UK Government’s Brexit strategy is beginning to emerge, David Davis signalled that the UK might also take a flexible approach to immigration controls after leaving the EU.

The Brexit Secretary told business leaders in Cardiff that after EU withdrawal changes to migration rules would not be allowed to damage the UK economy by creating labour shortages in key industries.

He told CBI Wales: "As we take back control of immigration by ending free movement as it has operated before, let me also say that we won't do so in a way which is contrary to the national economic interest. Because, as the Chancellor has said, Britain must win the global battle for talent.

"No-one wants to see labour shortages in key sectors. That won't be in anybody's interest."

Meantime, No 10 played down reports that Theresa May had been snubbed by European Council president Donald Tusk, who failed to invite her to an end-of-year dinner with EU leaders at a Brussels summit.

A UK Government spokesman said: "It is well known that Donald Tusk wanted to change the arrangements for the European Council and this timetable reflects those plans, with a one-day meeting instead of two. It is no surprise that the 27 other countries will meet after the European Council.”

He added: "Indeed it is recognition that the UK is leaving the EU and that our European partners need to prepare for the negotiations, just as we are, so that we can secure the best outcome for the UK and the EU."

But the SNP said the “snub” was an embarrassment for the Prime Minister. “The door is being shut in Theresa May’s face, which indicates just how much of an uphill task she faces in any negotiations with other EU leaders in the New Year,” said Stephen Gethins, the party’s Europe spokesman.