"Highly skilled" workers will be protected from any form of restrictions on the free movement of people introduced by the UK government post Brexit, Chancellor Philip Hammond has said.

Appearing in front of the Lords' Economic Affairs Committee, Hammond said top bankers and business people would be exempt from migration curbs to support investment into the UK economy. But he insisted that there can be no "uncontrolled" free movement of people to the UK following its exit from the European Union.

The chancellor also warned EU countries from trying to "damage" London's reputation as a leading financial centre, saying that the city benefitted the whole of Europe. Free movement of peoplegives all EU citizens the right to live and work wherever they wish within the 28-member state bloc.

Brussels maintains that the UK can only retain access to the single market post Brexit if it agrees to the free movement of people.

'Sensible immigration policy'

"It's clearly in our interests, and I would suggest the European Union's interest as well, to have as free and open access to each others' markets," Hammond was quoted as saying by the Independent.

"But we cannot accept uncontrolled free movement of people. That's the political outcome of the referendum decision that was made. I don't think that needs to strike fear into the heart of Japanese financial institutions because I would expect, due to the control that we would have over movement of people, we would use it in a sensible way that would certainly facilitate the movement of highly skilled people between financial institutions and businesses in order to support investment in the UK economy – that would certainly be my expectation," he said.

Brexit Phillip Hammond
Philip Hammond has ruled out 'uncontrolled' immigration into the UK from EU countries Mary Turner/ Getty Images

Hammond's comments came a day after he met top British bankers worried about the City of London's future following Brexit. "There are very good reasons to think that it is in the interests of the overall economies of the European Union countries, as well as the UK economy, that London, as Europe's financial centre, remains broadly as it is," he told the Lords' Economic Affairs Committee.

"The structures that we have in London, its very complex eco-system of banks, funds, insurance companies, law firms, business services firms, would not and could not be replicated anywhere else.

"To break it up or to try to damage it in the pursuit of some very narrow and hypothetical national advantage would be a huge mistake for any of our European Union partners to follow.

"I genuinely believe that London delivers not only for the UK but for the European Union as a whole," Hammond explained.