Philip Hammond has said European leaders are ”backward-looking” and preoccupied with ”paranoia” about other countries leaving the bloc after Brexit.
The Chancellor said EU must let go of ideas of punishing Britain for voting to leave the bloc and stop “constantly threatening members” who want to walk away.
His comments came during a three-day trip to Germany aimed at drumming up trade deals after Brexit, where Mr Hammond told EU leaders that they should be clear on the future relationship they want with the UK - as “it takes two to tango”.
He also made a joint pitch to business leaders with Brexit Secretary David Davis, where they called for a bespoke post-Brexit trade deal with the EU which would be the “most ambitious in the world”.
In an interview with the German newspaper Welt am Sonntag, Mr Hammond said: “We hear a willingness and enthusiasm in the USA and from many other countries around the world to make new trade deals with us. But we don’t hear that from Europe.
“We hear from Europe only backward-looking stuff. ’Are you sure you want to leave?’ Or ‘It’s a bad decision to leave.’ Or ‘You must be punished for deciding to leave.’
“Well, we are leaving and we want to retain the closest possible partnership with the European Union. But we can only have that if the European Union also wants it.”
Asked if a soft Brexit would encourage other countries to leave, the Chancellor said: “I can understand that paranoia. But imagine you are running a successful, thriving club. If one member leaves, you don’t immediately panic that all the other members might leave, but are confident they will want to remain.
“You cannot really run a club if you are constantly threatening members who decide to leave. You should rather redouble your efforts to remain attractive for new and existing members.”
Mr Hammond also stood firm on demands that financial services were included in any Brexit deal – an idea that has been opposed by chief Brexit negotiator Michel Barnier. The Chancellor said it was not a “realistic proposition” for the UK to accept a post-Brexit trade deal that does not include services and that the EU would be “crazy” to cut itself off from the City.