Dundee's MSPs have written to the prime minister demanding that money spent on the Capital of Culture 2023 bid is reimbursed.
"We disagree with the European commission's decision and are particularly disappointed we have been informed of their new position after United Kingdom cities have submitted their final bids", a spokesman for Prime Minister Theresa May said.
A week before the shortlist for the 2023 award was to be announced, the European Commission ruled that United Kingdom involvement "will not be possible", adding that it was "one of the many concrete consequences" of Brexit.
Five British cities were vying for the award: Dundee, Nottingham, Leeds, Milton Keynes and a joint bid between Belfast, Londonderry and Strabane.
The only two previous British cities were Glasgow in 1990 and Liverpool in 2008.
A Dundee 2023 bid spokeswoman said: "The bid team are urgently seeking clarification on what this statement will mean for the Dundee bid and we will be speaking to the department for digital, culture, media and sport as soon as possible".
BBCEven presenter Evan Davis was angry with the decision
She added: "In Leeds we believe in a future where our culture in all its forms is valued and experienced by the broadest set of people, and for it to be central to the city's identity and to its future - both economically and socially".
Only cities in countries within the EU, the European Free Trade Association (EFTA), or those that have applied to join the EU are eligible to be considered.
They added that the United Kingdom wants to continue work with Europe to "promote the long-term economic development of our continent" and added the department will carry on working with those in the United Kingdom who made bids.
It also notes that the Scottish Government wrote to the UK Government past year seeking reassurances that the UK would continue to participate in partnerships, such as the European Capital of Culture, and expresses concern at the amount of time, effort and expense the Dundee team have put in to scoping out a bid which has been wasted thanks to the Brexit policy of the UK Government.
A DCMS spokesperson said it was disappointed the decision had not been made before the bids had been made.
Tom Watson, deputy leader of the Labour Party, said some cities have already spent "up to £500,000 on their bid submissions".
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