Hammond, speaking to reporters before a meeting of the 28 European Union finance ministers on Friday, said Britain should work closely with the bloc to prioritise jobs and prosperity when Brexit talks start next week.
For Brussels, a concern with starting talks on such models would be that Brexit supporters might end up blocking them, raising the risk of time running out to get any deal: "Would you [.] 10 months later find that there was no real majority for that?" the official said.
EU Brexit negotiator Michel Barnier has warned London not to waste time, as Brussels waits for embattled British Prime Minister Theresa May to name a date for talks.
Nevertheless, it illustrated the challenge May will face in the remaining days before the European Union divorce talks begin: finding a position that satisfies both pro-European and eurosceptic factions of her party if she wants to remain in power.
Other EU governments will be happy to let Britain keep trade open as it would limit the hit to their own economies, officials told Reuters, though they are not ready to ease conditions that May would struggle to sell to her party's Brexit hardliners.
Britain's Leader of the House of Commons Andrea Leadsom is shown on June 12 in London.
The top European Union and UK Brexit negotiators will begin negotiations as scheduled in Brussels, despite the British political turmoil.
While May has repeatedly said she wants a special and deep partnership with the club Britain joined in 1973, she has also laced her assurances with threats that a breakdown of talks could harm security cooperation.
Protests in London erupt at town hall over high-rise fire
The blaze ripped through the building early Wednesday, trapping many residents in their homes. Many chased after her armored cars, prompting the police to intervene and push people back.
Scottish Conservative leader Ruth Davidson, who is newly influential after winning 13 seats in Scotland, has said Britain should prioritise "freedom to trade and our economic growth". "It is the only way to unite the country and strengthen our bargaining power with the European Union".
Jeremy Corbyn, leader of Britain's main opposition, said his Labour Party would not support May's Queen's speech in the lower house of parliament to try to force her out of power through a vote of no-confidence.
"Discussions are going well with the government and we hope soon to be able to bring this work to a successful conclusion", the DUP's Arlene Foster said after the meeting.
Mr Hammond's comments are likely to be seen as reflecting a softer approach to Brexit than Mrs May, who has insisted that no deal would be better than a bad deal.
Her Conservative Party lost its parliamentary majority in a snap election that she called to seek a stronger mandate for the Brexit negotiations.
May's government has said its Brexit plans remain the same, and will be pressing for close economic ties but a clear break with the bloc to be able to control immigration and restore sovereignty over British laws.
Dr Gerard Lyons, chief economic strategist at Netwealth Investments and co-founder of Economists for Brexit, said tensions between May and Hammond need to be quickly resolved: "The sooner it is clear that the United Kingdom team is in agreement, the better".
"And if that wasn't enough, calling an unnecessary general election purely for the self interest of the Conservative Party and having mucked that campaign up they are now putting the country in hock to the DUP".
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