Theresa May has given her clearest signal yet that that Britain is prepared to pay a Brexit “divorce bill” to leave the European Union.
The Prime Minister repeatedly refused to rule out that Britain would pay an exit fee – estimated by the EU to be as much as £50billion – which must be paid when the UK leaves the EU in March 2019.
In an interview with presenter Andrew Neil on BBC1 last night, Mrs May said that while the UK would not be “paying to leave” the country “had to decide what the obligations” are to the EU.
She said: “I am very clear about what the people here in the UK expect but I am also clear that we are a law abiding nation we will meet the obligations we have.”
She added: “There may be some particular programmes that we wish to pay to be members of because it is the national interest - and that will drive us.”
Mrs May also suggested that large numbers of immigrants could still come to the UK after Brexit.
The Government was “looking at the moment at what we think should be right”. She added “we will see a decrease in the number coming in” after Brexit but declined to give a figure.
Instead Mrs May stressed that Britain will get control over numbers of EU migrants coming to the UK.
On the prospects of a free trade deal Mrs May said she was seeking a “comprehensive free trade agreement which gives that ability to trade freely into the European single market and for them to trade with us.
“It will be a different relationship, but I think it can have the same benefits in terms of that free access to trade.”
Mrs May also stressed that she no deal with the EU after two years of negotiations “would be better than a bad deal”.
She added: “There are some people in Europe who talk about punishing the UK and I don’t want to sign up to an agreement which is based on that.”
Earlier Philip Hammond, the Chancellor, had been accused of undermining Britain's negotiating position by suggesting that leaving without a deal with the EU would not be the "worst-case outcome for everyone".
Mr Hammond also insisted that the UK "can't have our cake and eat it" after Brexit and said that leaving the EU will have significant "consequences".
A Government source criticised Mr Hammond's comments: "It's like negotiating to buy a house. If you're not willing to walk away then they will push you and push you."
In an interview with BBC Radio 4's Today programme the Chancellor said that Britain will not be able to "cherry pick" what it wants from the European Union after it leaves.
He said: "We understand that we can’t cherry pick, that we can’t have our cake and eat it, that by deciding to leave the European Union and negotiate a future relationship with the EU as an independent nation, there will be certain consequences of that. And we accept those."
Mr Hammond refused to back the claim by Boris Johnson, the Foreign Secretary,that Britain would be "perfectly OK" in the event that there was not a deal with the EU.
He said: "What you can assume is that everybody in the EU and UK is going into this negotiation looking to protect their own interests. It is not in the interests of anyone on the continent of Europe to have lines of trucks.
"I'm very confident we will not get an outcome that is a worst case outcome for everyone. That would be ridiculous.
"We are going to get a deal. The question is about the shape and nature of that deal and making sure that we are able to protect Britain's vital national interests."