Theresa May has threatened to pull out of the free trade deal with the EU if the rest of the bloc tries to punish the UK .

Warning that some of the values the continent holds dear could be "crushed into tiny pieces" if EU leaders take an aggressive approach towards negotiations, the Prime Minister said it would be a "calamitous act of self-harm" if any member state pursued a punitive deal, adding that the approach she put forward in a speech on Tuesday is in Britain's and Europe's best interest.

"No deal for Britain is better than a bad deal for Britain," the Prime Minister said.

EU officials have mooted making a post-Brexit UK pay contributions to the trading bloc or implementing high tariff barriers in order to maintain access to its market of over 500 million consumers.

But on Tuesday Ms May rejected such a proposal and said that outside of the single market, the UK would not be forced to make large contributions to the EU

"Our continent's great strength has always been its diversity. And there are two ways of dealing with different interests," she said.

"You can respond by trying to hold things together by force, tightening a vice-like grip that ends up crushing into tiny pieces the very things you want to protect. Or you can respect difference, cherish it even, and reform the EU so that it deals better with the wonderful diversity of its member states.

"Because we will not be members of the single market... we will not contribute significantly to the EU.

"The days of Britain making vast contributions to the EU will end," she added.

The UK paid around £13bn into Brussels' coffers in 2015.

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In December, Brexit Secretary David Davis told MPs that ensuring access to the EU's single market was the "major criterion" in Brexit talks and that if the UK had to pay contributions, "then of course we would consider it."

On Tuesday, Ms May said the Government would now seek a "comprehensive, bold and ambitious" free trade agreement, confirming that it would not seek to maintain any form of membership of the single market.

The EU has 56 deals of varying types with nations around the world. Without a favourable free trade deal, the country faces sharp rises in tariffs under World Trade Organisation rules

The Prime Minister said she did not believe the UK would leave the EU without a trade deal, but if it did, Britain could turn the situation to its advantage.

She said: “Because we would still be able to trade with Europe. We would still be free to strike trade deals across the world. And we would have the freedom to set competitive tax rates, and embrace the policies that would attract the world's best companies and biggest investors to Britain.