Angela Merkel has said Britain will be treated fairly after Brexit but warned that leaving the EU will come at a cost.

The promise comes just two days after the German Chancellor said everything from Britain's car industry to the travel of cats and dogs could be affected by the decision to break ties with the bloc.

At a conference of family-owned businesses, she compared Brexit to negotiating a free trade agreement backwards.

Mrs Merkel said that if the UK did not accept free movement of EU citizens "we will have to see how we balance that out," she commented.

Meanwhile, the UK's Brexit Secretary David Davis has said the Prime Minister put EU leaders "back in their box" after reports of a stormy dinner attended by Theresa May and European Commission President Jean-Claude Juncker at Downing Street.

"We've shown we mean business. We won't engage in silly games but neither will we put up with silly games," he told the the Express newspaper.

Mr Davis also said he was spending half his time preparing for the possibility the UK will have to walk away without a deal.

"I don't expect it will ever be used but it has got to be there as an available option if we absolutely need it."

Negotiations on the Brexit deal are expected to begin in earnest after the UK's General Election on June 8th.

On Wednesday, at a G20 trade union event in Berlin, Mrs Merkel said Britain was free to change rules to its own advantage after leaving the bloc, but had to expect there would be repercussions.

"If the British government ends the free movement of people, that will have its price," she said.

Mrs Merkel added that the disruption could be widespread because of the breadth of EU legislation.

"Currently, the 250,000 pets, cats and dogs that travel from Britain to the continent or the other way around each year are managed within an EU framework," she said.

"Now they'll need hygiene certificates - [these are] things we don't even remember."