Mervyn King: Britain should be upbeat about future outside European Union after Brexit

Lord King acknowledged that Brexit will bring 'great political difficulties', but said that there would also be 'many opportunities' economically for the UK striking out on its own.

The crossbench peer – who grew up in Wolverhampton – said the UK should leave the European single market and warned there were 'real question marks' over whether it should seek to remain in the customs union, which might constrain its opportunities to forge new trade deals.

Lord King – who led the Bank as Sir Mervyn King from 2003-13 – said it was too early to judge the economic impact of Brexit, despite data since the June 23 referendum being more positive than some economists had predicted.

He said: "I think the challenges we face mean it's not a bed of roses - no-one should pretend that - but equally it is not the end of the world and there are some real opportunities that arise from the fact of Brexit we might take.

"There are many opportunities and I think we should look at it in a much more self-confident way than either side is approaching it at present.

"Being out of what is a pretty unsuccessful European Union – particularly in the economic sense – gives us opportunities as well as obviously great political difficulties."

Lord King said it made no sense for the UK to seek to join Norway as a non-EU member of the single market, which would allow free access for businesses but probably mean accepting freedom of movement of EU citizens.

And he raised doubts over the merits of remaining within the customs union, which would allow Britain to trade goods without border tariffs, like Turkey, but restrict its ability to strike its own trade deals.

A Turkey-style arrangement would make it 'more difficult to take advantage of those opportunities,' said Lord King.

"I don't think it makes sense for us to pretend we should remain in the single market and I think there are real question marks about whether it makes sense to remain in the customs union. Clearly if we do that we cannot make our own trade deals with other countries."

Lord King said the Government should outline its policies on immigration 'sooner rather than later', arguing that it would be a 'mistake' to make them part of the withdrawal negotiations which will be triggered when Theresa May invokes Article 50 of the EU treaties next year.

His comments came as it was reported that the billionaire businessman chosen by US President-Elect Donald Trump as his new trade chief has said that Brexit represents a 'God-given opportunity' for other countries to take business away from the UK.

Wilbur Ross, the US commerce secretary designate, said Britain was facing a 'period of confusion' following the vote to leave the EU and that it was 'inevitable' there would be 'relocations'.

Mr Ross will be responsible for negotiating a free trade deal with the UK and his reported comments will raise concerns the incoming US administration will seek to exploit Britain's isolation following Brexit.

His remarks were said to have been made to an audience of Cypriot financiers in the days following last June's referendum vote before he had been appointed to Mr Trump's cabinet.

"I recommend that Cyprus should adopt and immediately announce even more liberal financial service policies than it already has so that it can try to take advantage of the inevitable relocations that will occur during the period of confusion," he is quoted as saying.

He is said to have added that the UK's withdrawal from the EU was a 'God-given opportunity' for financial rivals of the City of London, naming Frankfurt and Dublin in particular.