Chancellor warns UK will fight back if trade deal isn't agreed over Brexit
Chancellor Philip Hammond has warned the EU that Britain will not "slink off like a wounded animal" but will "fight back" if it does not get the Brexit deal it wants.
In some of the toughest talking yet ahead of the UK triggering the Article 50 negotiations on terms of withdrawal, the Chancellor said Britain would "do whatever we need to do" to be competitive in the event of leaving the EU without a trade agreement.
Mr Hammond told the BBC's Andrew Marr Show: "If there is anybody in the European Union who thinks that if we don't do a deal with the European Union, if we don't continue to work closely together, Britain will simply slink off as a wounded animal, that is not going to happen.
"British people have a great fighting spirit and we will fight back.
"We will forge new trade deals around the world. We will build our business globally. We will go on from strength to strength and we will do whatever we need to do to make the British economy competitive and to make sure that this country has a great and successful future."
Asked if this meant the UK would slash business taxes to attract investment away from the EU, the Chancellor said: "People can read what they like into it. I'm not going to speculate now on how the UK would respond to what I don't expect to be the outcome.
"But we are going into a negotiation. We expect to be able to achieve a comprehensive free trade deal with our European Union partners, but they should know that the alternative isn't Britain just slinking away into a corner."
The Chancellor also indicated the UK would pay any Brexit bills it owed to the EU.
He said: "Obviously, this is a piece of negotiating strategy that we are seeing in Brussels. We are a nation that honours its obligations and if we do have any bills that fall to be paid we will obviously deal with them in the proper way.
"We are a nation which abides by its international obligations. We always have done, we always will do, and everybody can be confident about that."
The comments came after a Lords report stated that Britain could legally walk away from the EU without paying a penny if there is no trade deal.
While it has been reported that the European Commission's chief Brexit negotiator Michel Barnier is seeking a €60bn (£52bn) "exit bill" from Britain, the Lords EU Financial Affairs Sub-Committee said all estimates of the cost of withdrawal were still "hugely speculative".
Mr Hammond rejected calls from a cross-party committee of MPs for the Government to give an immediate guarantee to the millions of EU nationals living in the UK of their future rights.
The Commons Exiting the EU Committee said the Government should act unilaterally and not wait for a reciprocal assurance over the position of British citizens in the EU. The Chancellor told ITV's Peston on Sunday: "We have to protect the couple of million British nationals who are living in the European Union.
"We have to get a fair deal for them as well.
"This isn't about turfing people out, this is about the rights people have."