Leading Tory Brexiteer Jacob Rees-Mogg said Britain would look “incompetent and weak” if it were not prepared to walk away from negotiations from Brussels when offered unsatisfactory terms.
Planning for the event of a no deal with the EU is “virtually non-existent”, according to Whitehall officials quoted in The Financial Times, making it difficult for the prime minister to strengthen Britain’s hand in the talks by keeping the threat of a “no deal” on the table.
Philip Hammond, the pro-EU chancellor, earmarked £3bn last year to prepare for every outcome of Brexit after coming under fire from Brexiteers for being too slow to commit cash to prepare for negotiations potentially collapsing.
However Sir Ivan Rogers, a former UK ambassador to the EU, said Brussels had concluded that the UK would not walk away as it was not working “full tilt” to develop the independent regulators it would need outside of the EU.
It comes as tensions over Brexit threatened to bubble over between different Tory factions amid a row over future customs arrangements with the EU.
Mr Rees-Mogg, who chairs the European Reform Group of backbench Tories, told The Sun: “Planning for no deal ought to be an essential part of the negotiations strategy.
“To show we could easily walk away would worry the EU, strengthening our position and failing to do so would be both incompetent and weak.”
Former Brexit minister David Jones also ramped up the pressure on Ms May by urging her to make it clear that preparations are being made.
“No-deal preparation has been going on for a long time and I think it would be helpful now for the government to make it absolutely clear that this work is being carried out, both for a domestic audience and to show the EU we are not bluffing,” he told The Telegraph.
A cabinet source told the newspaper: “The fear among many senior Brexiteers is that we are in no way going to be ready if we end up crashing out without a deal.
“We are staggeringly far behind where we should be.”
Pro-EU campaigners said a “no deal” scenario would “cause chaos in our economy” and accused Tory Brexiteers of “beating the drum for inevitable economic ruin”.
Labour MP Tulip Siddiq, a supporter of the Best for Britain campaign, said: “Independent forecasts have repeatedly shown that a ‘no deal’ scenario would cause chaos in our economy and downgrade the rights of our citizens.
“It would represent the kind of capitulation that Mr Rees-Mogg claims to campaign against, and would produce the very worst outcome from the Brexit process. It will decimate our public services and see household incomes plunge.
“Those supporting it must come clean over the likely consequences of ‘no deal’, or they must stop beating the drum for inevitable economic ruin.”
The prime minister’s official spokesman dismissed the criticism and insisted the government was actively planning for all Brexit scenarios.
The spokesman told a Westminster briefing: “The prime minister has said many times, most recently in her Mansion House speech – we take the issue seriously and as a responsible government we continue to plan for a range of scenarios.
“At the budget the chancellor committed an additional £3bn of funding so that departments and the devolved administrations can continue to prepare effectively for all Brexit scenarios, and over £1.5bn of this was allocated for 2018/19 in the spring statement.
“That’s in addition to the £700m already made available to prepare for Brexit.”