Brexit: 80 senior Labour figures tell Jeremy Corbyn party will 'never be forgiven' if it backs leaving single market

Labour leader warned that the move would make his anti-austerity agenda unaffordable

Labour leader Jeremy Corbyn has been urged to commit to remaining in the single market after Brexit (EPA)

More than 80 senior Labour figures have fired off a warning to Jeremy Corbyn that leaving the EU single market could scupper his efforts to ease austerity.

In a sign of the deep rifts within the party over its Brexit approach, the group of MPs, peers and union leaders said the move would risk a "multibillion pound hit to the public finances" and make the party's manifesto plans for schools, hospitals and social care unaffordable.

The alliance, which includes prominent figures such as Chuka Umunna and Lord Kinnock, told Mr Corbyn that Labour would "never be forgiven" if it backed leaving the single market.

The letter, published by The Observer, comes as Mr Corbyn was preparing to give a major speech on the EU withdrawal, where he is expected to clarify Labour's position on staying in a customs union after Brexit.

However the signatories have upped the ante by demanding the Labour leader commits to maintaining access to the single market by remaining part of the European Economic Area.

The letter, co-ordinated by the Labour Campaign for the Single Market, said: "Given the parliamentary arithmetic and the numbers of parliamentarians from other parties - including Conservative backbenchers - who have indicated they will join us in this endeavour, our country's continued participation in a customs union and the single market is now in the Labour Party's hands.

"For the sake of building a better Britain and safeguarding those our party was founded to protect, we must grab this chance before it is too late. We will never be forgiven if we fail to do so."

Mr Corbyn has come under increasing pressure to clarify his position that he wants a "jobs-first Brexit", which allows Britain to retain the benefits of the single market and customs union.

He is expected to use a speech in the Midlands on Monday to set out Labour's approach, where he will promise £8bn a year of Brexit saving for public services and jobs, according to the Sunday Mirror.

“We will use funds returned from Brussels after Brexit to invest in our public services and jobs of the future, not tax cuts for the richest," Mr Corbyn will say.

Mr Umunna, one of the signatories, warned leaving the single market would "torpedo" investment for the party's manifesto plans.

"Any 'funds returned from Brussels' will be utterly overwhelmed by the gigantic hit to the Exchequer of leaving the Single Market," he said.

"Leaving the SM will torpedo the investment and anti-austerity plans in our manifesto."

However Eurosceptic Labour MP Frank Field, who chairs the Commons work and pensions committee, said: "This is not what people voted for and it is playing with fire. We will lose northern seats if this happens. They (voters) know when they are being messed around."

Theresa May will hold a special Cabinet meeting on Thursday ahead of her keynote speech on Brexit on Friday, where she is expected to outline what the Government wants from Britain's future economic partnership with the EU.

She said: "Delivering the best Brexit is about our national future, part of the way we improve the lives of people all over the country.

"If we get them right, Brexit will be the beginning of a bright new chapter in our national story, and our best days really do lie ahead of us."