British Prime Minister Theresa May's efforts to pass a Brexit deal have suffered a further setback after Spain threatened to veto her draft divorce agreement over the handling of Gibraltar.

Madrid has objected to part of the deal that covers future trade and security relations between the UK and the European Union. It insists arrangements relating to Gibraltar, a small British territory on the southern tip of Spain, should be discussed separately.

Spain would not back the deal until the issue is clarified, Spanish Foreign Minister Josep Borrell said after discussions with EU chief negotiator Michel Barnier and EU ambassadors.

Spain has long claimed sovereignty over Gibraltar, which has been a British territory since 1713. But Gibraltarians, who voted almost unanimously to remain in the European Union in the 2016 referendum, are fiercely loyal to Britain and have resisted Spanish claims.

The draft Brexit deal must be agreed at an EU summit on November 25. Spain cannot itself block the deal, which can be approved if 20 of the remaining 27 EU nations agree.

An EU official told CNN that it was likely the issue would be ironed out before the EU Council meets at the weekend. “I am confident this will be solved before Sunday,” the official told CNN.

But Madrid's objections will frustrate May's efforts to see the deal through the EU smoothly before it returns to the UK Parliament for a final vote.

Spain wants negotiations over future arrangements for Gibraltar to be conducted separately from wider trade and security discussions.

A spokesman for May said Gibraltar should be included in the talks over the future relationship between the UK and the EU. “The PM has been clear that we will not exclude Gibraltar and the other overseas territories and crown dependencies from our negotiations on the future relationship.”

Gibraltar's Chief Minister Fabian Picardo said that the Spanish government's position “does little to build mutual confidence and trust going forward.”

“The language of vetoes and exclusions should be the language of the past,” he added.

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