Ministers ‘will quit’ if Brexit’s watered down

Top Tories warn May not to give in to Hammond on softer deal

THERESA May will face Cabinet resignations if she gives in to demands from Philip Hammond to water down Brexit, senior Tories warned last night.

The Chancellor will use a major speech in the City tonight to set out his vision on Brexit, amid mounting speculation he is pressing Mrs May to compromise in talks with Brussels starting next week.

The leading figure in the Remain campaign told his German counterpart this week that the Conservatives had been punished by young voters for their stance on Brexit at last week’s election.

He suggested that Brexit policy could now change. And he is now said to be pressuring Mrs May to adopt a strategy that would keep Britain in the EU customs union – even though this would give EU judges a say over British laws and limit the options for striking new trade deals around the world.

His speech follows a string of high-profile interventions by Remain-supporting Tories in recent days designed to exploit Mrs May’s post-election weakness to force a change of strategy.

David Cameron and John Major have both urged her to soften her approach on Brexit since the election, as have George Osborne, Kenneth Clarke, William Hague and Scottish Tory leader Ruth Davidson.

An ally of Mr Hammond said he was also now receiving more support in Cabinet from Remainers who had previously accepted the referendum results.

‘There are more voices around the table speaking out now,’ the ally said.

But Eurosceptic Tories last night warned they would not accept any backsliding from Mrs May on the issue.

A senior Tory source said at least three Cabinet ministers were prepared to quit if the Prime Minister bowed to the demands of her Chancellor. International Trade Secretary Liam Fox has told friends his job would be pointless if the UK stayed inside the customs union.

The source said: ‘There is a co-ordinated operation going on, led by Philip Hammond, that is designed to destabilise the Prime Minister.

‘What they are risking now is creating open warfare in the Tory Party. If Hammond gets his way then you will get Cabinet resignations.’

Treasury sources were tight-lipped about the contents of Mr Hammond’s speech at the Mansion House this evening. One said he would be putting forward a pragmatic approach.

The Chancellor has said publicly that he wants the UK to prioritise ‘ jobs, prosperity and business’ rather than control of immigration in the negotia- tions with Europe. He is now said to be lobbying to keep the UK in the customs union – the trade agreement between European states that allows firms to trade across borders without tariffs or customs checks.

This would avoid exporters facing a ‘cliff edge’ of tariffs and border controls when the UK leaves in 2019. But it would mean the UK accepting trade policy set in Brussels on a permanent basis.

Eurosceptic Tories reacted angrily yesterday after Mr Cameron called on Mrs May to open talks with Labour about Brexit. The former prime minister, who resigned last year after losing the referendum, said: ‘I think there will be pressure for a softer Brexit.’

Former Chancellor Mr Clarke said: ‘We’re in a new situation and the national interest calls for a cross-party approach.’ He dismissed claims that this was a bid to overturn the referendum result, saying the idea was silly.

‘They are risking open warfare’