European Union leaders have reportedly agreed to push the UK towards a “hard Brexit” in order punish Britain and counter the rise of Eurosceptic movements across the continent.

A ‘hard Brexit’ means the UK withdrawing from the Single Market as well as the EU itself, therefore allowing it to control its own borders and form trade deals with other nations.

One EU diplomat told The Observer: “If you British are not prepared to compromise on free movement, the only way to deal with Brexit is hard Brexit.

“Otherwise we would be seen to be giving in to a country that is leaving. That would be fatal.”

Norbert Röttgen, chairman of the foreign affairs committee in the German Bundestag, also told The Observer  that the EU should take a hard line on Brexit. “I am really ready to come to a result but if [the British position is] no, no, no, then even I would have to say that there is no common ground.”

The vice-president of the centre-right European People’s party, German MEP David McAllister, added: “You can’t have 100% control over internal migration, say no to European Court of Justice rulings, and that you won’t pay anything [into the budget]. This just won’t work.

“The British are testing us – we all know that. They are testing how united Europe is. So what is important is that Europe stays together. No bilateral negotiations with the British. No cherry picking. We are doing this as a bloc.”

This morning, Chancellor Philip Hammond, who has supported a ‘soft Brexit’ in the past, said the EU’s new hardline stance “doesn’t make a lot of sense”,

He told the Andrew Marr show on BBC1 that EU countries should “think very carefully about what they want” before endorsing a hard Brexit.

He added that the British government would be “working with them [the EU member states] to find a way that works for both of us, [as it] has to work for Britain and for the European Union, because this is a negotiation and there’s got to be a win-win outcome.”

The hardening line from the EU, represented by the 27-nation consensus, comes as polls reveal France’s Eurosceptic insurgent Marine Le Pen has taken a commanding lead in the race to be president.

Speaking in the wake of Donald Trump’s election as president of the United States, UKIP’s interim leader Nigel Farage warned it could be “game over for the EU” if Marine Le Pen, leader of the Front National, wins France’s presidential election.

“She will clearly win through to the second round. And after what has happened elsewhere, only a fool would say she would have no chance of winning overall. France is a deeply, deeply unhappy country. If she were to win, it would be game over for the EU”, he said.