Philip Hammond cancels annual Mansion House address to City leaders in the wake of the Grenfell Tower fire disaster

He was expected to signal developments in the Government’s approach to Brexit in the speech

Philip Hammond on the campaign trail with Theresa May ahead of the general election (Sky)

Chancellor Philip Hammond has cancelled his annual Mansion House address to City leaders in the wake of the Grenfell Tower fire disaster.

Mr Hammond announced on Thursday that in light of the tragedy he had withdrawn and that his thoughts are with the families affected by the blaze.

The Chancellor was set to use the speech to reassure businesses over Brexit, but there was also speculation he would signal a softening in the UK’s negotiating stance, increasing tensions in a cabinet divided over the EU.

There is a precedent for cancelling the speech, a key event in the calendar of both the political and financial worlds, after George Osborne delayed it last year following the murder of MP Jo Cox.

Mr Hammond said on Twitter: “In view of the Grenfell Tower tragedy, I have withdrawn from giving the Mansion House speech tonight. My thoughts are with the local community.”

It followed an announcement by Prime Minister Theresa May that there will be a full public inquiry into what caused the fire which has so far claimed 17 lives.

Officials indicated that Mr Hammond would revisit the issues he had planned to address in his speech at a later date, including telling businesses they would still have access to £42bn of European Investment Bank funding after Brexit.

But the speech, given alongside City leaders including Bank of England Governor Mark Carney, was also expected to cover any changes in the Government’s approach to Brexit following the election.

Mr Hammond was reported to have been in line for a move from the Treasury if the Tories had won a majority. But with the vote instead weakening Ms May, he is reported to have made his support for her conditional on a different Brexit strategy.

A new approach could include staying in the customs unions and a more emollient tone on immigration, making the matter secondary to economic considerations.

But cabinet ministers who favoured Ms May’s former tougher approach towards the negotiations, including International Trade Secretary Liam Fox, are reported to be ready to resign if Ms May’s direction of travel changes.

Former Business Secretary Vince Cable took to Twitter to brand the cancellation of the speech which he expected to advocate a soft Brexit as “farcical”, adding: “brexitshambles continues [sic]”.