SPAIN has ‘won the first battle’ over Gibraltar and ‘has the upper hand’ going into Brexit negotiations, a senior official in Madrid has boasted.

It comes after Spain secured veto power over any decision made in Brexit negotiations regarding the Rock last year, and just weeks before Gibraltar is said to become the focus of the talks.

In a major concession to Spain, a guideline document agreed between the bloc and the UK last May enshrined that ‘after the United Kingdom leaves the Union, no agreement between the EU and the UK may apply to the territory of Gibraltar without the agreement between the Kingdom of Spain and the UK.’

But as the EU’s top negotiator Michel Barnier is set to reaffirm Spain’s power to interfere with the territory, officials in the country have claimed the move as a ‘victory’ that will give them the edge in round two of Brexit negotiations.

The British Overseas Territory has been in the sights of successive Spanish government’s since the Treaty of Utrecht in the 18th century, which handed the rocky outpost to the British.

A senior official told a Spanish paper his country was ‘not in a hurry’ when it came to forging a position on Gibraltar.

He added: “We don’t want to give the impression that we are rushing into such a delicate situation but we have won the first battle and now have the upper hand.”

It comes after former UK Chancellor and Tory MP Ken Clarke claimed Gibraltar will be the real hurdle of the Brexit process as it ‘will make the Irish problem look like a picnic’ if the UK opts to leave the single market.

Deputy Chief Minister of Gibraltar Joseph Garcia accused Spain of seeking to use Brexit to advance its 300 year-old claim to the territory, attacking the EU for ‘totally unacceptable’ discrimination against its pro-European people.

Under the guidelines, a separate two-year transition phase for Gibraltar will need to be negotiated directly between the governments in London and Madrid.

The UK fears Spain will threaten to veto efforts to strike the Brexit transition deal that businesses want if Theresa May refuses to negotiate that separate deal to cover the disputed territory.

“For us, the view that Brussels has put forward is totally unacceptable,” Garcia said.

“It is shameful that these pro-European people in Gibraltar should be treated by the European Union in this way.”

Crunch talks will resume with the EU this month.