Highly skilled migrants including European bankers and businessmen and women will be exempted from migration curbs after Britain leaves the EU, the Chancellor has said.
Philip Hammond revealed that some EU migrants will be given preferential treatment to protect the economy.
Asked about recent warnings from Japan about the the impact of migration controls on its UK-based companies, he said: "We cannot accept uncontrolled free movement of people. That's the political outcome of the referendum.
"I don't think that needs to strike fear into the heart of Japanese financial institutions.
"We will use it [control over free movement] in a sensible way that will facilitate the movement of highly skilled people between financial institutions and businesses to support investment in the UK economy."
It came as Francois Hollande, the French president, said that London would be unable to remain the financial centre of Europe after Brexit.
He also appeared to accuse David Cameron, the former prime minister, of "running away" for resigning after the referendum, suggesting that he had "failed to deal with the consequences".
In a speech in Paris he said: "We have a financial centre in a country that is no longer, or would no longer like to be, part of Europe but which still wants to be the financial centre of Europe. Well, no. Europe is not just a financial space, it's also a zone of common values, of principles where we stand together."
Mr Hammond yesterday hit back at France and said: "There are very good reasons to think it is in the interest of the overall economies of the EU countries as well as the UK that London as the UK's financial centre remains broadly as it is. London's financial services market supports the real economy across Europe, not just in the UK.
"I believe the structures that we have in London with its very complex ecosystem of banks, funds, insurance companies, business services firms would not and could not be replicated. To break it up in the pursuit of some very narrow and hypothetical national advantage would be a huge mistake for any of our European partners to follow."
Meanwhile, Theresa May yesterday rejected demands by Donald Tusk, the president of the European Council, for her to begin the formal process of exiting the EU.
Mr Tusk stated before a meeting in Downing Street: "Our goal to establish closest possible EU-UK relations. Ball in UK court to start negotiations. In everybody's best interest to start asap."
A No 10 spokeswoman said the Prime Minister did not feel she was "under pressure". She said: "There was a sense that they accept the position the Prime Minister has set out, and that that should provide useful time to prepare for the negotiations, precisely because we want to have a smooth departure.
"We want to take the time to prepare for the negotiations by talking to stakeholders up and down the country and doing the work here."
The European Parliament has appointed Guy Verhofstadt, the former Belgian prime minister and an arch-federalist, as its chief Brexit negotiator.
Mr Verhofstadt has warned the UK that it would not be able to remain in the single market while gaining controls over immigration. The parliament will approve any agreement on the conditions for the UK's departure.
u?Police are investigating claims four girls as young as eight racially abused an Eastern European man on their walk home from school in Bedminster, Bristol. The group is said to have sworn at him before throwing rubbish and cups of water from a puddle. A witness said they were accompanied by a parent who failed to intervene.