The economic threats posed by the UK’s exit from the EU have been “underestimated” , one of the European Central Bank’s officials has said, warning of the tight negotiating timetable for the Brexit talks.

Ewald Nowotny, Austria’s central bank governor and a member of the ECB’s governing council, said he feared “many negative surprises” could still emerge for the both economies after the official two-year timetable kicked off last month.

“Negotiations with London must be concluded within two years. At this time, one must agree on an orderly exit and also on the future cooperation, that is, an customs union or a free trade pact”, Mr Nowotny told Der Standard.

“These are all things that have taken much more time in the past”.

The EU-27 will be meeting for their first summit to discuss the UK’s exit and their joint negotiating deadlines on Saturday. Any extension of the Brexit talks from the current two-year timeframe would require the unanimous backing of all member states, a development Mr Nowotny said was “unlikely”.

Growth in both the eurozone and UK economies have held up well in the wake of the June referendum, helped along by a brightening world economy.

Mr Nowotny also stressed that any banks and financial firms who intended to remain “active” in the EU after Brexit would need to come under the supervision of the ECB.

Last month, the ECB said UK-based banks would face at least a six-month wait before being granted relocation licenses that would allow them to operate in the continent once the UK has left the bloc.

The ECB is the common supervisor for the eurozone’s largest banks and grants licenses to all lenders that operate under its jurisdiction in the single currency area.

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