No-deal Brexit would be ‘betrayal’ of what was promised by Leave campaign, says Philip Hammond

Chancellor was talking to business leaders at World Economic Forum in Davos

A no-deal Brexit would be a “betrayal” of what was promised by Leave campaigners during the EU referendum campaign, the chancellor has said.

Philip Hammond told UK business leaders at the World Economic Forum in Davos that such an outcome – which Theresa May has refused to rule out – would “undermine prosperity and equally undermine the referendum”.

The intervention comes just weeks after Mr Hammond told another group of business leaders in a conference call that a no deal should be taken off the table by the government – as Labour has suggested.

He also warned the attendees at the Davos dinner not to try and thwart Brexit with a second referendum, and called for their help implementing a more liberal immigration regime after the UK leaves.

“Not leaving would be seen as a betrayal of that referendum decision, but equally leaving without a deal would undermine our prosperity and would equally represent a betrayal of the promises that were made,” he said.

Speaking at the same summit, Leo Varadkar, the Irish prime minister, warned the twin commitments of the Good Friday Agreement and WTO rules meant that the UK would find it “very difficult” to sign trade deals under a no-deal Brexit.

Some Brexit-sceptic ministers in government have become increasingly vocal as the clock ticks down to the exit date, with increasing pressure on the prime minister to soften her plan to get cross-party support and avoid crashing out.

David Gauke, the justice secretary, said a week ago that the government should be “flexible” and consider making concessions such as passing a customs union to get the Brexit deal through. Before Christmas work and pensions secretary Amber Rudd called on the government to build a “coalition” in parliament to pass the deal.

It has been reported that 18 ministers, including Mr Hammond and Ms Rudd, have been meeting once a fortnight to organise to block a no-deal Brexit.

Defence minister Tobias Ellwood, who also attends the meetings, has described a no deal as a “historic act of self-harm, with profound economic, security and repetitional consequences for the UK”.

Business minister Richard Harrington, who has said he will resign if there is a no deal, has said: “My clear objective is to stop the nonsense of a hard Brexit.

“It may be the way to do that is supporting Cooper/Boles, it may be that someone can suggest a better way of doing it or ideally a way I can do it in cooperation with the government.”

Labour looks set to back a backbench amendement, dubbed “Cooper/Boles” after its originators, Labour’s Yvette Cooper and Conservative Nick Boles, with cross-party support to avoid a no-deal Brexit by instructing the government to extend Article 50. The EU treaty clause, which legally regulates the Brexit negotiation process, can be unilaterally revoked by the UK, but has to get EU approval for an extension.

Michel Barnier, the EU’s chief negotiator, as well as some EU national leaders, have said that an extension could be possible but it would have to have a reason behind it.