BRUSSELS has set itself on a Brexit collision course with London after Martin Schulz, one of its most powerful players, made clear the UK could not have access to the European single market without accepting the free movement of people, saying the two principles were “inseparable”.

Speaking to an audience at the London School of Economics, the President of the European Parliament, branded Britain’s decision to quit the European Union a "disaster" for Britain and the 28-member bloc.

He claimed the UK Government was in "no way prepared" for the Brexit vote and hit out at the campaign to leave, which, he said, had divided Britain like no other. He expressed alarm at the recent upsurge in xenophobia in Britain.

Mr Schulz also warned Theresa May that Britain would struggle to get a consensus on a Brexit deal among the 27 remaining member states the longer it waited to trigger Article 50, the mechanism which starts the two-year divorce process.

“That is why I called on Prime Minister May to notify the UK's departure from the EU as soon as possible,” he declared. Mr Schulz met her in Downing Street on Thursday.

His comments fly in the face of remarks made less than 24 hours earlier by Boris Johnson, the foreign secretary, who argued that trading access to the single market with free movement of workers was "complete baloney".

He insisted: "The two things have nothing to do with each other. We should go for a jumbo free trade deal and take back control of our immigration policy."

But the foreign secretary was slapped down by the Prime Minister after he specified Article 50 would be triggered in the early part of 2017. Mrs May has been keen to keep matters very close to her chest and has said only that the process would not begin until after the end of this year.

Whitehall insiders have stressed that giving any details at this stage in the process could weaken the UK Government’s negotiating hand but it has opened up Mrs May and her ministerial colleagues to the charge that they simply do not have a plan.

The PM has also made clear that she wanted a “UK approach” to the Brexit talks and that the Scottish Government and other devolved administrations would be “fully engaged”, all of which will take time. The Herald has been told that Mrs May hopes to hold the first intergovernmental meeting by the end of October.

Earlier this month, David Davis, the Brexit minister, was censured by No 10 after he told MPs it was “very improbable” Britain would seek access to the single market if that meant allowing free movement and giving up its control of its borders.

Mr Schulz told the LSE: "I see a clear majority in the European Parliament for insisting that the fundamental freedoms are inseparable ie no freedom of movement for goods, capital and services, without free movement of persons.

"I refuse to imagine a Europe where lorries and hedge funds are free to cross borders but citizens cannot. To claim now that the vote is a clear popular mandate to sacrifice single market access on the altar of ‘migration’ is simply wrong."

The German social democrat politician stressed how it was important that the Brexit process was started soon, saying the EU could not afford to “press the pause button” when the continent was in the middle of a migration and refugee crisis and when it had to plan its future financial framework to complete economic and monetary union.

“Moreover, if Article 50 is triggered too late, we run the risk of facing European elections in the UK in 2019 at the very same time as it is leaving the EU. That would be a very difficult thing to explain to UK and to European citizens,” he warned.

Mr Schulz also cautioned that many Leave campaigners tended to “underestimate the complexity and delay” in forging new trade relationships with the EU and the rest of the world although he stressed that Brussels was not “on some punitive mission”.

Elsewhere, George Osborne in his first major speech since being sacked as chancellor by Mrs May, warned his Tory colleagues against pursuing a "hard Brexit" yet he accepted that the free movement of people was unlikely to survive Britain's withdrawal from the EU.

The former cabinet minister also called Leave campaigners "naive" for expecting Britain to get everything it wanted from Brexit.

Mr Osborne said the Brexit vote was "one of the low points" of his time in office and it had "sent shock waves around the world".

He added that negotiations for Brexit were "the most important set of decisions Britain has faced since the Second World War".

The former Treasury chief urged Mrs May to pursue "the closest possible economic and security relationship with our European partners while no longer being formal members of the EU".

He told the Chicago Council on Global Affairs: "I can't see us consenting to the current arrangements around free movement of people that clearly caused such concern in the referendum.

"Equally, I find some of the take-or-leave it bravado we hear from those who assume Europe has no option but to give us everything we want more than a little naive.

"We need to be realistic that this is a two-way relationship: that Britain cannot expect to maintain all the benefits that came from EU membership without incurring any of the costs or the obligations. There will have to be compromise.”

Mr Osborne stressed how the “false logic” that led from exiting the EU to exiting all forms of European co-operation and that values the dangerous purity of splendid isolation over the practical necessity of co-operation in the real world had to be resisted.

"Brexit won a majority. Hard Brexit did not. The mainstream majority in our country do not want to be governed from the extremes," he added.

Tory MP Dominic Grieve, former attorney general and a leading supporter of the Open Britain campaign group, said: "George Osborne is absolutely right that a hard Brexit has no mandate and would be no answer to the problems Britain faces.

"In fact, it would put jobs and livelihoods at risk by erecting new barriers to trade with Europe.

"As he said, being close to Europe despite the Brexit vote is vital for Britain's future.

“Our economic future depends on membership of the single market, while co-operation with Europe on security is crucial in the fight against terrorism and organised crime," added Mr Grieve.