Hammond ‘helping Brussels by failing to prepare for no deal’

PHILIP Hammond was accused last night of failing to prepare for the possibility of Britain leaving the EU without a deal and of wanting to keep the City too closely tied to Brussels.

Tory MPs demanded yesterday that ministers step up preparations for a ‘no deal’ Brexit to give Theresa May the ability to walk out of negotiations if Brussels refuses to agree satisfactory terms.

Eurosceptics raised fears that contingency planning had ground to a halt in Whitehall, making it almost impossible for the Prime Minister to follow through on her threat to walk away if necessary.

Meanwhile, the Treasury was forced to deny the Bank of England was at loggerheads with Mr Hammond over his reluctance to allow a clear divide with the EU in financial regulation after Brexit.

Sources told the Financial Times that relations were ‘very, very bad’ because the Chancellor wanted to keep Britain close to EU rules to ensure maximum access for the City to the European market, while the Bank was opposed to any compromise that would leave it as ‘a rule taker’.

But the Treasury claimed the two sides were ‘united’.

Meanwhile, former civil servants warned that contingency planning for Brexit was far from where it should be for Mrs May to say realistically that Britain could exit the EU without a deal in March 2019.

Tory MP James Duddridge said last night: ‘Preparations for no deal are essential. Without no deal as a credible option we have little negotiating power.’

Fellow Tory Andrew Bridgen added: ‘Not preparing for no deal undermines our position and makes no deal more likely.’

Sir Ivan Rogers, the UK’s former ambassador to the EU, claimed last week that Brussels believed Mrs May was bluffing because of Whitehall’s lack of preparation.

A No10 spokesman insisted last night that preparations were under way for the possibility of a ‘no deal’ Brexit, adding: ‘The Government is committing extensive resources as part of our preparations for leaving the EU – whether in the event of a deal or not.’

The Treasury denied a rift between Mr Hammond and the Bank of England, claiming they were united to ensure the stability and prosperity of the economy’.

A spokesman said: ‘The United Kingdom cannot be an automatic “rule taker”.

‘We will start our first day outside the EU from a unique position, with full alignment.’

Boris Johnson should be given control of defence, foreign aid budget and Brexit negotiations, a senior Tory says. Tom Tugendhat, chairman of the Commons foreign affairs committee, will say today that Mr Johnson and his predecessors as Foreign Secretary were ‘hobbled’ because the role is not powerful enough.