UK cities bidding to be crowned the European Capital of Culture have had their hopes dashed by Brussels as a result of Brexit, prompting a furious political backlash with one Government minister branding the decision “crazy”.

Scottish First Minister Nicola Sturgeon said she was “absolutely dismayed” by the decision while the UK’s Department for Digital, Culture, Media and Sport (DCMS) said it was “deeply disappointed”.

Downing Street said non-EU members had been awarded the Capital of Culture before but the European Commission said the decision was “one of the many concrete consequences” of Brexit.

Five different UK bids were competing to host the 2023 European Capital of Culture, spending hundreds of thousands of pounds on their entries, and officials said urgent discussions were being held with Brussels about the apparent Brexit ban.

Nottingham, Leeds, Milton Keynes, Dundee and a joint Belfast-Londonderry-Strabane bid were all in the running for the accolade, which has the potential to provide a significant economic boost.

Arts Minister John Glen hit out at the “crazy decision by (the) European Commission”, adding: “We’re leaving the EU – not Europe! My team at DCMS are speaking with the five cities right now on the way forward.”

At First Minister’s Questions in Holyrood, Ms Sturgeon said: “I’m absolutely dismayed by the news that I’ve heard this morning from the European Commission that Dundee’s European Capital of Culture bid looks as if it is going to be the latest victim of the Tories’ obsession with taking this country out of the European Union against our will, and they should hang their heads in shame.”

Iain Stewart, Tory MP for Milton Keynes South, said it “seems a very bitter decision” by the European Commission as “we are not turning our backs on Europe yet this looks like they are turning their backs on us”.

DUP MEP for Northern Ireland Diane Dodds said: “This is needless and spiteful posturing by the commission.”

A spokesman for Belfast City Council said it was “deeply disappointed” and Leeds City Council leader Judith Blake said “to have the rug pulled from under us at this late stage would be a huge blow”.

A DCMS spokesman added: “We disagree with the European Commission’s stance and are deeply disappointed that it has waited until after UK cities have submitted their final bids before communicating this new position to us.

“The Prime Minister has been clear that while we are leaving the EU, we are not leaving Europe and this has been welcomed by EU leaders.”

A Number 10 spokesman said Norway, Turkey and Iceland had all been awarded the Capital of Culture despite not being in the EU.

“This would not have been the first time that a country that is not part of the EU has hosted the European Capital of Culture,” the spokesman said.

The commission said the only countries eligible to host the culture capital were EU member states, candidates to join the EU or countries in EFTA/EEA that participate in the Creative Europe programme – and all three of those non-EU countries fall into one of the other categories.

Guidance issued by the Government when the competition was launched in December 2016 said the UK is “still a full and active member of the EU” therefore “the competition for the European Capital of Culture 2023 will run as normal”.

Shadow culture secretary Tom Watson described the commission’s decision to “shun” the UK as a “great shame” and said some cities have already spent up to £500,000 on their bids.

A European Commission spokesman said: “The decision to nominate Hungary and the UK as hosts of the European Capitals of Culture for 2023 was taken by the European Parliament and the Council of Ministers in 2014, two years before the UK decided to leave the EU.

“As one of the many concrete consequences of that UK decision, UK participation is no longer possible. It therefore makes sense to discontinue the selection process.”