British Prime Minister Theresa May is expected to announce the UK will leave the single market, the customs union and European Court of Justice - unless the European Union agrees to end freedom of movement.
The British Prime Minister’s willingness to give up membership of the single market will be made clear in a major speech at Lancaster House in London on Tuesday, according to the Sun on Sunday.
Her red line issues will be an end to free movement from the EU and clearance to hold bilateral trade talks with other countries, which it is thought will not be achievable while still in the single market.
A Downing Street source told Sky News: "The issue of the single market and the customs union will be answered on Tuesday when the Prime Minister sets out her negotiations."
Pro-EU campaigner MP Anna Soubry has described the anticipated move as "grossly irresponsible, if true."
The Conservative MP for Broxtowe said: "The Government has no mandate for this. To go into the negotiation conceding on the single market and the customs union is extremely serious and very bad news."
The pound crashed last Monday after comments by Mrs May on the single market in an interview with Sky's Sophy Ridge on Sunday.
Mrs May insisted she was not “muddled” in her thinking on Brexit but warned Britain cannot expect to hold onto "bits" of EU membership.
Call for Britain to unite
She is expected to use her speech to appeal for the UK to unite post-Brexit – and will condemn the use of the words “Leaver” and “Remainer” as she asks Britain to “unite to make a success of Brexit.”
She will say that while people may have had different views about the outcome of referendum, "the victors have the responsibility to act magnanimously. The losers have the responsibility to respect the legitimacy of the result. And the country comes together."
She will add: "The overwhelming majority of people - however they voted - say we need to get on and make Brexit happen.
"Business isn't calling to reverse the result, but planning to make a success of it. And the House of Commons has voted overwhelmingly for us to get on with it too.
"So the country is coming together. Now we need to put an end to the division and the language associated with it - Leaver and Remainer and all the accompanying insults - and unite to make a success of Brexit and build a truly Global Britain."
Shadow minister for Brexit Kier Starmer told Sky News: "Theresa May has had six months to give some clarity, she hasn’t done it. She needs to do that on Tuesday and she needs to reassure the country.
"If, as is expected, she says that she will be leading the UK out of the single market the question is, 'What are you going to put in its place? What are you going to negotiate to make sure that business can succeed in the future in the way it succeeds now?'"
Mr Starmer added that he would be setting out what Labour hopes Mrs May will guarantee in her speech - including rights to remain for EU citizens already in the UK.
British tax haven
Meanwhile, reports have emerged that the Netherlands will block any trade deal with the UK unless it signs up to tough tax avoidance regulations preventing it from becoming a tax haven.
The Deputy Prime Minister, Lodewijk Asscher, has written to socialist leaders across the continent stipulating his party’s red lines in coming talks.
In a letter seen by The Guardian, however, Mr Asscher writes that it is in the interests of both the UK and the remaining 27 EU member states that Mrs May's government is prevented from creating a low-tax outpost.
He writes: "Let’s fight the race to the bottom for profits taxation together which threatens to come into existence if it is up to the Conservative UK government.
"This is why I propose to come to a new trade agreement with Great Britain, but only if we can agree firmly upon tackling tax avoidance and stopping the fiscal race to the bottom."
