DAVID Davis has confirmed that Britain will pay “roughly” £10 billion a year during a two-year transition period to EU coffers but he insisted suggestions that the overall divorce bill could be as high as £40bn were “made up”.

The Brexit Secretary, appearing on BBC TV’s Andrew Marr Show, stressed how UK officials would continue to go through the EU’s arguments on the financial settlement line by line, challenging their legal basis.

But he went on: “That doesn't mean that we want to see our allies and friends in Europe massively disadvantaged in the next few years and that's what we're aiming not to do."

Asked about claims by "Brussels sources" quoted as saying the final settlement could be around £40bn, Mr Davis replied: "They sort of made that up too."

He added: "I'm not going to do an actual number on air, it would be ridiculous to do that, but we have a fairly clear idea where we're going on this."

In her speech on Friday, Theresa May sought to reassure member states that they would not lose out financially during the current EU budget period - which runs to 2020 - in a bid to end the stalemate in the Brussels negotiations.

However, hopes in Downing Street that her address would also end the Cabinet tensions over Brexit appear to have come to nothing after it was reported that Boris Johnson, the Foreign Secretary, was seeking assurances that Britain would not adopt any new EU rules during the transition period.

Yet Mr Davis made clear that while the UK would be leaving the jurisdiction of the European Court of Justice, the existing arrangements would apply during the transition.

"We'll come out from under the jurisdiction and the lawmaking of the European Union, we'll have a couple of years which allows people to adapt," he said.

A Department for Exiting the EU source later said: "The framework for this period would be the existing structure of EU rules and regulations."

In her speech, the Prime Minister said EU nationals would still be able to come to live in and work in the UK during the transition period, although they would have to register with the UK authorities.

She also promised the rights of EU citizens living in the UK would be written into British law and that the British courts would be able to take account of the rulings of the ECJ.

However, Mr Davis made clear they would not be able to enforce their rights through the ECJ as the EU has been demanding.

"That's not going to happen,” he insisted. “Basically, the aim with the withdrawal treaty will be to have British citizens in Europe and European citizens in Britain treated broadly similarly. We are not under any circumstances going to be accepting the overarching supremacy of the European Court. That's going."

The Brexit Secretary said it was "quite likely" that there would be a system of joint EU-UK courts to resolve disputes in this and other areas.

"Most international treaties, the Canadian-European trade treaty for example, have arbitration mechanisms that work between the two countries.

"Normally what happens is, it's something like one of theirs, one of ours and one neutral panel, or something like that. And that's almost certainly where we'll end up on this," added Mr Davis.