Philip Hammond claimed leaving the European Union without a deal in place would hit the nation hard and cost far more than what has been set aside to cope with such an outcome. The Government’s analysis suggests that in a disruptive no-deal Brexit there will be a hit to the exchequer of about £90 billion.

He should have been telling Brussels every week that he was preparing for a no deal

Liam Halligan

Brexit-supporting economist Liam Halligan ridiculed the claim and said it is simply based on the Chancellor’s “determination” to keep Britain within the EU.

Speaking on BBC Radio 4’s Westminster Hour, Mr Halligan said: “The figure is based on the Treasury’s pre-referendum study of the impact of just a vote to leave the European Union.”

Mr Halligan ridiculed the claims by the Treasury during the June 2016 referendum which stated there would be an immediate and profound economic shock if Britain votes to Leave.

As a result, the economist insisted influential figures outside of Westminster do not give the Chancellor’s numbers any credence.

He added: “I think it’s a shame because Philip Hammond is a bright guy. He’s fiscally competent. I think he has got a good economically literate mind.

“But I think unfortunately when the history of this period is written, Philip Hammond’s not just failure but absolute determination not to prepare for a no deal and to not publicly state that he is preparing for a no deal, not to fund a no deal.

“It took him many many months to put money in for no deal. We should have been preparing for a deal from the day after the June 2016 referendum.

“He should have been telling Brussels every week that he was preparing for it. A lot of these things we have to do anyway.

“So when the history of this period is written, I think his failure to do that will be seen as a major strategic error born out of, basically, his determination that we don’t leave.”

A senior cabinet source told the Daily Express last week that preparations for leaving the EU are more advanced than people think.

“It’s not really a binary argument between deal or no deal,” he said. “Even if we leave without a deal there will still be many agreements in place between the UK and the EU to make sure trade is done, aeroplanes fly and electricity is available.

“We will have had an extra six months since March 29 and although things have changed we are in a strong position. There will be no armageddon as some people in project fear are predicting.”

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Speaking in the Commons Mr Hammond pointed to Government analysis suggesting a multi-billion-pound “hit” to the exchequer in a no deal scenario would also have to be factored in to future decisions.

His intervention comes after Mr Hunt and Mr Johnson both declared they are prepared to take the UK out of the EU without a deal.

Mr Johnson, the former Foreign Secretary, insisted if he wins the Tory leadership election against Jeremy Hunt, he will attempt to renegotiate Britain’s withdrawal agreement and also prepare for leaving without a deal on World Trade Organisation (WTO) terms if a better deal cannot be reached with Brussels.

With now eliminated leadership contender Dominic Raab suggesting he would be prepared to suspend Parliament if he could not get support for no deal, several leadership candidates had dismissed the idea as undemocratic.

And in an interview with Daily Mail, Mr Johnson also played down the suggestion: “I’m not attracted to archaic political devices, I would prefer to see our friends around the chamber recognise – and I think they do – that it’s our job now to get this thing done.”

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