EU must be firm on 'hard' Brexit, warns Francois Hollande

French President Francois Hollande has insisted the EU must take a firm line with the UK after Theresa May signalled she backed a so-called "hard Brexit".

Mr Hollande said Britain wanted to leave the bloc "but doesn't want to pay", which he argued was "not possible".

His comments come after the Prime Minister told party activists she wanted British firms to have "the maximum freedom to trade with and operate within the single market", but not at the expense of allowing free movement or accepting the jurisdiction of the European Court of Justice.

Mr Hollande's stance reflects that of the German Chancellor Angela Merkel, who has stressed the UK cannot have full access to the single market if it limits EU immigration.

It is also in line with demands from his finance minister, in an interview with Sky News, that the City of London (LSE: CIN.L - news) be stripped of its euro clearing operations.

In a speech in Paris, the French leader said: "Britain wants to leave, but doesn't want to pay. That's not possible.

"Britain decided to go for a Brexit, in fact I believe a hard Brexit.

"Well we have to follow through with Britain's wishes to leave the European Union and we have to be firm.

"If not we will put into question the EU's principles."

The reporting of his comments were later cited as a factor behind a so-called 'flash crash' in the value of the pound against the dollar.

Earlier, Mrs Merkel said allowing the UK to have all the benefits of the internal market while restricting movement of people would lead to a free-for-all.

She (Munich: SOQ.MU - news) told a group of German business leaders that upholding the EU's "fundamental freedoms" remained essential.

In a speech on Brexit at the recent Tory party conference, Mrs May told supporters "I want it to give British companies the maximum freedom to trade with and operate within the single market - and let European businesses do the same here."

But she added: "Let's state one thing loud and clear: we are not leaving the European Union only to give up control of immigration all over again."

Meanwhile, Chancellor Philip Hammond has sought to allay fears over the impact of the EU referendum decision during a trip to the US.

He restated the Government did not recognise the terms "hard Brexit" and "soft Brexit".

Mr Hammond told Bloomberg TV: "We want to get the right Brexit for Britain, the one that works for Britain and works for the European Union as well, because this has to be about mutual advantage.

"It has to be about a mutually beneficial solution."