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The Prime Minister has insisted the UK will leave the EU's Customs Union and negotiate a free-trade agreement that will be good for Britain and Europe.

Speaking to Sky News Political Editor Faisal Islam, she said: "We are leaving the Customs Union. Then we are going to negotiate a free-trade agreement with the EU.

"It'll be a separate agreement we can negotiate," the PM added.

"That means we can get on with the job of enhancing trade round the world - important for prosperity and jobs."

Her comments will be seen as an attempt to assuage fears of those Tory MPs who fear a 'soft' Brexit and as a rebuke to colleagues such as Chancellor Philip Hammond, who last week suggested the UK-EU economic relationship would change only "very modestly".

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Speaking during her trade trip to China, Mrs May dismissed a report which suggested the UK economy would be hit whatever exit deal is negotiated with the EU.

"The analysis has not been completed and it is not like the agreement we want to negotiate. We want to trade with as little friction and tariffs as possible," she said.

"What matters for people is: Are we going to leave the EU? Yes.

"Are we taking back control of our money, borders and our laws? Yes.

"Are we going to ensure we are going to do trade deals around the world? Yes. Are we going to ensure there will be more jobs for people in the UK? Yes.

Mrs May insisted that work to secure more business for Britain outside the EU was already well under way.

"While we look ahead, we are ensuring businesses today can sign new agreements for selling great British products into the Chinese market.

"We're seeing more Chinese investment coming into the UK. Why does it matter? It is about jobs for people in the UK."