No-deal Brexit to cost UK £90bn, chancellor tells Tory leadership rivals

Soon-to-be-sacked Philip Hammond threatens revolt, telling MPs 'It will be for the House of Commons to ensure that that doesn't happen'

Philip Hammond has warned a no-deal Brexit will cost the UK £90bn, as he urged MPs to join him in stopping the new prime minister from carrying it out.

The chancellor – who is likely to be sacked by either Boris Johnson or Jeremy Hunt – said it would be “wrong” for any government to pursue a crash-out departure from the EU.

“The government's analysis suggests that, in a disruptive no-deal exit, there will be a hit to the Exchequer of about £90bn,” he told MPs, revealing the figure for the first time.

Mr Hammond again refused to rule out joining a Labour-led vote of no confidence to topple a Tory prime minister about to carry out a no-deal Brexit.

And, hinting strongly at his intentions, he said: “I believe that it will be for the House of Commons, of which I will continue proudly to be a member, to ensure that that doesn't happen.”

The warning comes after Mr Hunt hardened his Brexit stance, setting a fresh deadline of 30 September for Brussels to budge on the Irish backstop controversy before a no-deal Brexit becomes inevitable.

It was an attempt to outflank Mr Johnson, who has vowed to leave the EU by the current deadline of Halloween “do or die” and remains the clear favourite to win the Tory leadership race, with the result declared on 23 July.

Speaking in Treasury questions, the chancellor poured scorn on the multi-billion pound tax-and-spending pledges made by both leadership candidates, which have triggered accusations of misleading voters.

“We've built up around £26-27bn of fiscal headroom and the purpose of having that headroom is precisely in order to protect the UK economy from the immediate effects of a possible no-deal exit,” he said.

“But I have no doubt whatsoever that, in a no-deal exit, we will need all of that money and more to respond to the immediate impacts of the disruption of a no-deal exit – and that will mean there is no money available for longer-term either tax cuts or spending increases.

“But let me go further - the government's analysis suggests that in a disruptive no-deal exit there will be a hit to the Exchequer of about £90 billion.

“That will also have to be factored in to future spending and tax decisions.”

Last November, the government published an analysis suggesting the UK economy would shrink by 9.3 per cent over 15 years, if the UK crashes out of the EU – with borrowing mushrooming by as much as £119bn.

No fresh estimate has been made, but it is the first time Mr Hammond has put an absolute figure of the likely impact into the public domain.

He joked it was “highly unlikely” he would survive as Chancellor, given the Brexit stance of whoever becomes prime minister.

And, on no-deal, he added: “I have been consistently clear that I believe leaving with a no-deal exit will be bad for the UK, bad for the British economy, bad for the British people.

"We cannot however rule out that that could happen because it is not entirely in our hands, but I do agree with him that it would be wrong for a British Government to seek to pursue no deal as a policy.”