BRUSSELS (Reuters) - Outgoing Prime Minister David Cameron told European Union leaders on Tuesday that Britain's future relations with the bloc it voted last week to leave could hinge on the EU's willingness to rethink free movement of workers.
Cameron, who resigned after losing a referendum last week on remaining in the EU, partly due to concerns about an influx of EU workers, told his last summit of the 28-nation bloc he hoped the United Kingdom would maintain as tight an economic and political relationship as possible with the EU.
"Britain will be leaving the European Union but we will not be turning our back on Europe," he told a news conference after a dinner at which he said many European partners expressed regret and voiced friendship for Britain.
EU officials and diplomats said the mood was coolly polite but there was a consensus around the table that Cameron had dug his own grave by taking part in decades of "Brussels-bashing". As Commission President Jean-Claude Juncker put it: "You should not be surprised if your citizens believe you."
The Conservative leader said he had reported with sadness on the outcome of the referendum, saying: "People recognised the economic case for staying, but there was a very great concern about movement of people and that was coupled with concern about issues of sovereignty. I think we need to think about that, Europe needs to think about that."
In a veiled rebuke to Leave campaign leaders such as Boris Johnson, who is vying to succeed him, Cameron said Britons would have to understand they could not keep all the benefits of EU membership without the costs.
"If you want the full benefits of the single market, you'll have to be part of every part of it," he said.
Driving home that message, French President Francois Hollande said continued access to the EU's prized single market was dependent on accepting the so-called four freedoms of movement of goods, capital, workers and services.
"If they don't want free movement, they won't have access to the single market," he said, adding that the City of London would no longer be able to act as a clearing house in euros.
Cameron said he had not faced overwhelming pressure to trigger immediately the exit clause in the EU treaty, despite some public statements to the contrary.
German Chancellor Angela Merkel said the British referendum decision was irreversible and warned against "wishful thinking".
European Central Bank chief Mario Draghi told the leaders that the impact of Brexit could shave a cumulative 0.3 to 0.5 percentage points of growth off the euro zone economy over three years.
Cameron had earlier faced public displays of irritation from some EU leaders and lawmakers who pressed him to give early notice of Britain's intention to leave. He said that would be up to his successor.
The European Parliament adopted a non-binding resolution on Tuesday demanding that London activate the EU treaty's voluntary exit clause as fast as possible. That would launch negotiations on withdrawal terms with a two-year countdown to departure.
"Waiting for several months, as has been announced by you, Prime Minister Cameron, and taking the destiny of our entire continent hostage purely for internal party political reasons would be totally unacceptable," European Parliament President Martin Schulz told the British leader in the summit.
"That would not mean stability - on the contrary it would mean prolonged uncertainty," the German Social Democrat said, summing up the fears of many EU partners.
Merkel said London should be allowed time to recover its balance after the political shockwave before formally notifying its partners of its plans. But she added that a decision could not be delayed too long.
For the first time, the other 27 leaders will hold their own meeting on Wednesday to have a discussion about how to deal with Britain on its way out of the bloc it joined in 1973, and how to take the Union forward without it.
Conservative Party officials said on Tuesday that Cameron's successor would be appointed at the earliest on Sept. 9.
EU diplomats say Britain has no interest in putting itself under time pressure by handing in its notice, and the EU cannot compel London to do so. But one EU official sought to raise the pressure by telling reporters the European Banking Authority, based in London, could be moved soon to Frankfurt or Paris.
Underlining the political upheaval that the Brexit vote set in motion, Scottish First Minister Nicola Sturgeon is to visit Brussels on Wednesday for talks with the president of the European Parliament and European Commission officials.
Sturgeon has said Scotland, where nearly two in three voters backed staying in the EU, does not want to leave the bloc and may hold a new referendum on independence.
European Council President Donald Tusk, who chairs EU summits, turned down a request from Sturgeon for a meeting.
Merkel, Europe's most powerful leader, said earlier in a speech in parliament that she would continue to regard the UK as "a friend and a partner" but stressed that there could be no formal or informal talks until Britain made the formal request to leave.
"We'll ensure that negotiations don't take place according to the principle of cherry-picking," she said.
Dutch Prime Minister Mark Rutte, whose country holds the EU's rotating presidency, said Britain was in chaos after the stunning vote and should be given time to recover its footing.
"England has collapsed politically, monetarily, constitutionally and economically. It is not reasonable to demand from them to trigger Article 50," Rutte told reporters.
Illustrating his point, Labour Party MPs passed a vote of no-confidence in their leader, Jeremy Corbyn, accused of failing to campaign effectively for the Remain camp. Corbyn defiantly said he would not stand down and would contest a grassroots party leadership election if challenged.
UK Independence Party leader Nigel Farage, who campaigned for an "out" vote, was jeered by many EU lawmakers when he told the European Parliament that the EU was doomed and other countries would follow Britain's lead.
"If you were to cut off your noses to spite your faces and to reject any idea of a sensible trade deal, the consequences would be far worse for you than it would be for us," he warned.
Writing by Paul Taylor; Editing by Noah Barkin and Alastair Macdonald