The European Union does not want to "build a wall" with Britain as it leaves the bloc, European Council President Donald Tusk said as he laid out draft guidelines for negotiations on post-Brexit ties.
"My proposal shows that we don't want to build a wall between the EU and Britain. On the contrary the UK will be our closest neighbour and we want to remain friends and partners," Mr Tusk told a press conference in Luxembourg.
Mr Tusk said that the EU would aim for an "ambitious" free trade agreement with the UK.
But he added: "Our agreement will not make trade between the UK and EU frictionless or smoother.
"It will make it more complicated and costly than today for all of us. This is the essence of Brexit."
Draft guidelines for the European Union's negotiation of its future relationship with the UK make clear that Brussels wants "as close as possible a partnership" after Brexit, but expects there will be "negative economic consequences".
The guidelines drawn up by Mr Tusk are due to be approved by leaders of the remaining 27 EU states at a summit later this month, clearing the way for negotiations on post-Brexit trade to begin.
A draft leaked in Brussels states: "The European Council restates the Union's determination to have as close as possible a partnership with the UK in the future.
"Such a partnership should cover trade and economic co-operation as well as other areas, in particular the fight against terrorism and international crime, as well as security, defence and foreign policy."
The draft European Council guidelines warn: "At the same time, the European Council has to take into account the repeatedly stated positions of the UK, which limit the depth of such a future partnership.
"Being outside the customs union and the single market will inevitably lead to friction.
"Divergence in external tariffs and internal rules as well as absence of common institutions and a shared legal system, necessitates checks and controls to uphold the integrity of the EU single market as well as of the UK market".
"This unfortunately will have negative economic consequences."
Mr Tusk also said it was not the EU's objective to show that Brexit was the right choice.
"I fully understand and of course I respect Theresa May's political objective, to demonstrate at any price that Brexit could be a success and was the right choice.
"But sorry, it is not our objective."
Luxembourg's Prime Minister Xavier Bettel said: "There will be no winners after Brexit. Both sides will be losing.
"Minimising the losses and limiting the negative impacts as much as possible in respect of the level playing of the international market is the challenge we all face around the table."
He called for an "intelligent Brexit" and one "without cherry picking and especially without giving the impression to other EU citizens that to be outside is more interesting (than) to be inside".
Mr Bettel, who will meet the British Prime Minister in London next week, said he "didn't learn that much more than I knew before" from her Mansion House speech.
"It is not clear exactly what they want," he said of the UK's position.
He added: "To give the impression that the UK will be the big winner of Brexit, I told you before, there will be no winner - not them, not us."
Mrs May said she hopes the European Union's final guidelines will offer the "flexibility to allow the EU to think creatively and imaginatively about our future economic partnership", her spokesman said.
"This is a draft text, a text that has not been formally published but has been circulated by the EU 27 for comment," he told reporters. "We look forward to seeing the final guidelines when published."