The EU was adamant that the free movement of goods and capital remains contingent on the free movement of people

Cake is an eat-or-have peoposition.

They also wanted to make an example of the UK for anyone else who might get a nationalist bug up their butts and vote to leave.

The Brits were a bit too full of themselves to believe that they would be made an example of and really were looking forward to having the cake they had just eaten.