BRITAIN will lose the benefits of the European single market and its financial sector will lose the "passporting" arrangements which allow them to operate in the remaining EU as a result of Brexit, Brussels' chief negotiator Michel Barnier has said.

Mr Barnier told a conference in the Belgian capital that the EU wants to offer its "most ambitious free trade agreement" to the UK, but warned that there was no question of Britain "cherry picking" elements of the single market which it wanted to keep.

He warned that national parliaments in the remaining 27 states, as well as the European Parliament, could block any future trade deal if the UK indicated it was planning to move away from EU standards of regulation on issues like food safety, workplace protections and the environment.

With Theresa May and key Cabinet ministers due to meet later on Monday to discuss the UK's Brexit "divorce bill", Mr Barnier said that it remained his priority to "settle the accounts accurately" before moving on to trade talks.

And, in a speech to the Centre for European Reform thinktank, he said it was for the UK to "come forward with proposals" for how to avoid a hard border between Northern Ireland and the Republic, raising the possibility that different rules could be applied in Northern Ireland and the mainland.

Mr Barnier used Mrs May's old catchphrase "Brexit means Brexit" as he dismissed the "contradictions" of Leave supporters who argue that Britain can continue to enjoy some of the benefits of the single market while ditching its core principle of freedom of movement.

Pointedly noting that "the UK knows the rules" because it had a part in drawing them up, he insisted that the principles of the market were "non-negotiable".

He added: "We take note of the UK decision to end free movement of people. This means, clearly, that the UK will close the benefits of the single market. This is a legal reality.”

While UK-based financial services companies may be able to operate in the EU post-Brexit on the basis of "equivalent" regulations, they will "lose their European passport" and any future agreements will be subject to the proviso that Brussels will "never compromise on financial stability", said Mr Barnier.

He rejected suggestions that the UK will continue to be able to benefit from the work of European agencies, arguing that "freedom implies responsibility for building new UK administrative capacity".

And he dismissed the argument that Northern Ireland must maintain the same regulations as the rest of the UK, pointing out that more than 100 areas of cross-border co-operation already exist.

"I expect the UK, as co-guarantor of the Good Friday Agreement, to come forward with proposals," he said.

"The island of Ireland is now faced with many challenges.Those who wanted Brexit must offer solutions."

The EU will also insist on a "level playing field" on trade, meaning that the UK faces an "important and decisive" choice on whether to stick to European standards or risk losing access if it cuts red tape, he said, warning that its decision will "shape the discussion on our future relationship and shape also the conditions for ratification of that partnership in many national parliaments and in the European Parliament".

"There will be no ambitious partnership without common ground on fair competition. Stated: Tax-dumping, food safety, social and environmental standards," he warned.

And he added: "If we manage to negotiate an orderly withdrawal, fully respecting the integrity of the single market and establishing a level playing field, there is every reason for our future partnership to be ambitious. This is our preferred option.

"This is why we have started internal preparations with member states, to be ready to talk about the future as soon as we will have agreed on how to settle the past.

"The EU will, of course, be ready to offer its most ambitious FTA (free trade agreement) approach."

As pressure mounts for Mrs May to prepare Britain to leave the EU without a deal, Mr Barnier said that Brussels would be ready for this outcome, but it was "not our scenario".

"I regret that this no-deal option comes up so often in the UK public debate," he said.

"Only those who ignore, or want to ignore, the current benefits of European Union membership can say that no deal would be a positive result."

Mr Barnier's speech came as Downing Street refused to confirm reports that Monday's meeting of the Cabinet's Exit and Trade (Strategy and Negotiations) sub-committee would discuss the Brexit divorce bill.

Reports, dismissed as speculation by Number 10, have suggested Mrs May could be prepared to offer a further £20 billion in payments, which would bring the total sum Britain is prepared to pay to settle its liabilities to around £38 billion - well short of the 60 billion euro (£53 billion) sought by Brussels.

European Council president Donald Tusk has set a deadline of the start of next month for Britain to make further movement on the divorce bill and Irish border for EU leaders at a summit in December to declare "sufficient progress" has been made on withdrawal issues for talks on a future trade relationship to begin.

The Prime Minister's goal of making a breakthrough at the December 14-15 European Council meeting could be further complicated by the domestic political difficulties facing German Chancellor Angela Merkel.

Her attempts to put together a coalition have collapsed, raising the prospect of fresh elections in Germany and meaning that one of the European Union's most significant players will be focused on her own position rather than being fully engaged in the Brexit process.

Brexit-backing Tory backbencher Henry Smith said: "Especially as Germany struggles to form a government, now is not the time for Britain to offer more money than her obligations are due in EU Brexit negotiations.

"The EU27 will of course miss UK cash but no deal would damage their economies and trade surplus with us far worse."

Arriving for a meeting of the EU's General Affairs Council in Brussels, Dutch foreign minister Halbe Zijlstra said the uncertainty in Germany would make it harder for the EU to take "tough decisions" but should not affect the Brexit process because that relied on the UK to make the next move.

"It doesn't really affect the Brexit process because at this moment we are waiting for a substantial offer from the British and there is not really a role for the Germans at this moment," he said.

Asked if he was aware of a "substantial offer" from the UK, he said: "I have seen a lot of signals but that has been happening for a few months now. It has to be concrete and on the table instead of in the press."

The ministers who make up the subcommittee that is meeting on Monday are: Mrs May, Chancellor Philip Hammond, First Secretary of State Damian Green, Home Secretary Amber Rudd, Foreign Secretary Boris Johnson, Brexit Secretary David Davis, International Trade Secretary Liam Fox, Business Secretary Greg Clark, Environment Secretary Michael Gove and Defence Secretary Gavin Williamson.

Arriving at the Brussels summit, German foreign minister Michael Roth said that the UK must "move" on its financial settlement in order to get the green light in December for talks to move on to the second phase, dealing with the future trade relationship.

Mr Roth said the EU27 need "clarity" from Britain on its divorce bill, adding: "I currently see no chance of the European Council in December really sending out the signal that these talks can get going."

And he added: "It is about the money. In the end, it's about the rights of the citizens of the EU and it's about the money. I have already made it clear that the British must make a move.

"They must stand by their contractual obligations. They can't be released from them."