Angela Merkel has made clear the UK will not fully access the single market without free movement, after Theresa May said she wants a Brexit deal with both border controls and "maximum freedom" for British firms in Europe.
The German Chancellor is demanding the UK not be able to "cherry pick" the best parts of the EU without accepting the basic terms of membership.
But her most recent comments followed reports this morning that Ms May is planning for a hard Brexit, which the Prime Minister later claimed had misrepresented her view.
Speaking in Cologne, Ms Merkel said there could not be negotiations based on "cherry picking", adding that it is important that "we also make clear on the other hand that access to the single market can only be possible on the condition of respecting the four basic freedoms.
"Otherwise one has to talk about limits [of access]."
Ms May fuelled speculation that Britain was heading for a "hard Brexit" outside the single market in an interview on Sunday in which she said she was not aiming to preserve "bits" of the UK's EU membership.
But asked at a press conference in London on Monday whether she was ruling out single market membership, the PM said: "What I said yesterday was what I have been saying for the past few months in relation to Brexit, notably that the vote on June 23 was very clear.
"People wanted us to take control of immigration and people coming to the UK from the EU, but we also want the best possible deal in trade with and operating within the single European market for British businesses and likewise for European businesses operating in and trading with the United Kingdom."
She later claimed that reports she was preparing for a hard Brexit in which the UK was to quit the single market, and which precipitated a slump in the pound, had got it "wrong".
Responding to Ms Merkel's comments, the Prime Minister's official spokeswoman said: "We are about to enter a negotiation with 27 other countries and as we prepare for those negotiations, countries will be talking about their positions and how they are going to approach them.
"The Prime Minister has been clear that the British people made clear it is important we take control of immigration but this shouldn't be a zero-sum game and we should be approaching this on how we can get the maximum freedom for UK businesses to operate in and trade with the single market.
"There are many countries around the world that have free trade arrangements with the European Union."
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