Philip Hammond has said the UK "cannot be members of the single market".
The Chancellor announced the Government's intention to leave the single market to the House of Commons before Theresa May confirmed the news.
"We cannot be members of the single market because of the political lines around the four key freedoms that the other leaders have set," he told the Treasury Committee as the Prime Minister delivered her long-awaited Brexit speech.
May's Brexit speech: Live Updates
Around 20 minutes later, Ms May announced that Britain remaining in the single market "would mean complying to rules and regulations without having a vote on what they are".
“It would to all intents and purposes mean not leaving the EU at all," she told her audience at London's Lancaster House.
The Prime Minister echoed Mr Hammond by saying that the deal she would be pursuing when negotiations get underway "cannot mean membership of the single market".
She then set out her 12 priorities for the negotiations, the first of which was leaving the single market.
Britain would continue to pay into the EU budget for "specific EU programmes" of its choosing, she said.
The UK would regain control of its borders, she added, but EU citizens would still be welcome in the UK.
Mr Hammond told the chamber: "For six months, we've kept as many options open as possible as we review this negotiation with the European Union.
"We've heard very clearly the views and political red lines expressed by other European leaders, and we want to work with them, we want to recognise and respect their political red lines.
"That is why the Prime Minister is setting out right now the position that she is, which is that we will go forward understanding that we cannot be members of the single market because of the political red lines around the four freedoms that other European leaders have set."
In her speech, Ms May also pointed to the EU's demand that all members comply with 'four freedoms' – including, crucially, freedom of movement for EU citizens.
She said single market membership would mean the European Court of Justice having "direct legal authority in our country".
Both sides in the referendum debate had "made clear" that a vote to leave would mean leaving the single market.
