Mr Davis responded: "The simple answer we've given to this before, and it's very important because there is a distinction between picking off an individual policy and setting out a major criterion.

"The major criterion here is getting the best deal for goods and services to the European market. If that's what he's talking about then of course we'll consider it."

Speaking later, Mr Hammond, the Chancellor, said: "We need to go into these negotiations with as many tools in our tool box as possible, and as flexible an approach as we can.

"We have got a clear idea of what we are seeking to achieve out of these negotiations, but this is a negotiation and our counterparts on the other side will also have their agendas and their objectives, and we need to be flexible in responding to those.