PARIS (AFP) - French President Francois Hollande has sent one of the strongest warnings yet that Britain will have to pay a heavy price for leaving the European Union, adding to deep concern in financial markets.

He called for "firmness" by the EU powers in Brexit negotiations to avoid the risk that other countries might seek to follow Britain's lead and leave the bloc.

The comments added to jitters on financial markets, where the pound on Friday (Oct 7) morning suffered its biggest drop since Britain voted in a June referendum to leave the EU.

"There must be a threat, there must be a risk, there must be a price, otherwise we will be in negotiations that will not end well and, inevitably, will have economic and human consequences," he said in a speech on Thursday evening.

"Britain has decided on a Brexit, I believe even a hard Brexit. Well, we must go all the way with Britain's will to leave the European Union.

"We have to have this firmness" otherwise "the principles of the European Union will be questioned" and "other countries or other parties will be minded to leave the European Union in order to have the supposed benefits and no downsides or rules".

Mr Hollande made the speech to mark the 20th anniversary of the creation of the Institut Jacques Delors, a think-tank founded by the former president of the European Commission.

He said Delors "had also faced crises provoked by the United Kingdom", noting that the late British prime minister Margaret Thatcher in the 1980s obtained a rebate on its EU contributions worth billions of pounds every year.

Mrs Thatcher "wanted to remain in Europe, but receive a cheque in return", he said.

"Today, Britain wants to leave, but does not want to pay anything. That is not possible."

British Prime Minister Theresa May announced on Sunday that her government will trigger Brexit negotiations by the end of March, putting the country on course to leave the European Union by early 2019.

European powers keen to dampen rising euroscepticism in their own backyards have taken a hard line with Britain, warning that informal negotiations cannot start before the two-year notification process is triggered.

Mrs May's government and party is divided over whether to go for a "hard" or "soft" withdrawal from the EU.

"Hard" Brexit would mean quickly severing all links with EU institutions and pulling out of the single market, relying instead on World Trade Organization rules to trade overseas.