Businesses had better move fast to prepare for Brexit in under two years and should not count on long transition periods to cushion the impact of Britain leaving the European Union, the EU's chief negotiator has said.

Many businesses, notably in London's financial services sector, which is dominant in Europe, or among manufacturers wary of new tariff barriers are considering relocating parts of their operations from Britain.

However few have made firm decisions until they see what kind of new trading relationship can be agreed.

Defending his planned phasing of negotiations to start next month - under which talks on trade will not start until other issues are settled - Brexit negotiator Michel Barnier told the European Parliament he wanted to build trust to forge a deal that suits both sides and warned that no deal was a bad option.

Responding to questions from politicans, he also stressed the tight timetable for offering legal clarity to firms and people before a two-year negotiating window closes in March 2019 and Britain is out of the EU, deal or no deal.

Even with agreement, he warned, they should not rely on gentle transition periods.

"Possibly we will work on transition periods after Brexit, after Britain leaves, periods of phasing out and of phasing in toward the future relationship," Mr Barnier said.

"But the real transition period is now, before withdrawal," he said.

"I recommend that particularly all economic actors make good use of this period so that withdrawal, on the day it happens, probably in March 2019, is as orderly as possible."

Mr Barnier confirmed he expects to start talks after the British election on 8 June.

He said British Prime Minister Theresa May's move to call a vote she is expected to win handsomely offered the prospect of a stable government that could help negotiations.

He rejected criticism in Britain of his refusal to launch negotiations on a future EU-UK free trade pact before the Union sees "significant progress" on a divorce treaty focusing on the rights of expatriate citizens, the Irish border and a financial settlement to cover outstanding British commitments to the EU.

"This sequencing is not done to create problems, or as some kind of punishment for the United Kingdom," Mr Barnier, a former French foreign minister and EU financial services commissioner said.

"It is there to solve problems and put them in the right order.