The UK will “pay a price” if it moves to restrict EU immigration after Brexit, Angela Merkel said on Wednesday.

In some of her toughest language on Brexit yet, the German chancellor warned that the EU would act to protect its own interests and could create “obstacles” for Britain.

And in a barely veiled threat, she said there could be consequences for the British car industry.

“If the British government ends the free movement of people, that will have its price in relations with Britain,” Mrs Merkel told a meeting of trade union officials in Berlin.

“That's not malicious,” she said. “But you cannot expect to enjoy all the benefits and then say there will be an upper limit of 100,000 or 200,000 EU citizens, no more, or we’ll only accept researchers, but nobody else. This will not work.”

Britain will be free to make its own rules after Brexit, Mrs Merkel said, but warned the EU would not stand by if its interests were threatened.