Brexit: UK could badly damage trade with EU neighbours if it focuses on rest of the world, warns George Osborne

Former Chancellor says it makes no sense to pursue deals with the likes of Australia, if EU trade ‘suffers dramatically’

George Osborne, who laughed as Lord Heseltine mocked the ‘Three Brexiteers’ in the Cabinet (Getty)

George Osborne has warned that trade with the rest of Europe may “suffer dramatically” if the Government focuses instead on post-Brexit deals with the rest of the world.

The former Chancellor criticised a “binary choice” that made trade with far-flung countries a greater priority than with Britain’s “near-neighbours” across the Channel.

Mr Osborne also appeared to join in mocking the “Three Brexiteers” – the Cabinet ministers in charge of an EU exit strategy – as “a brilliant set of appointments”.

He laughed as Lord Heseltine said, sarcastically, that David Davies, Liam Fox and Boris Johnson would “come up with the answers which have escaped me”.

The appearance before the Commons business select committee came hours after a leaked Treasury document warned a “hard Brexit” could cost Britain up to £66bn a year in lost tax revenues.

Government figures predicted the UK’s gross domestic product (GDP) could fall by as much as 9.5 per cent if it adopts World Trade Organisation rules after it leaves the EU.

Mr Osborne was not asked about the document – which was drawn up while he was still Chancellor – but made clear his opposition to a clean break with the rest of the EU.

He told MPs: “I agree with what my successor said at the Conservative conference, Philip Hammond.

“He said the country didn’t vote to make itself poorer – that wasn’t the intention of the majority who voted to leave the UK.

“So we do want to make sure we continue to have the closest possible economic relationship with the place where over 40 per cent of our exports go.”

Attacking the idea of a “binary choice”, Mr Osborne said: “It’s no good increasing your trade with Australia if your trade with Germany, France, and Belgium suffers dramatically as a result.

“We can't escape the fact that we are going to be doing a lot of trade with some of our near neighbours, some of the most prosperous advance economies in the world.”

On Nissan’s threat to pull investment at its flagship Sunderland car plant if tariff barriers are introduced, Mr Osborne said: “We are a European base for car manufacturing.

“We produce more cars out of that plant in Sunderland than the whole of Italy. That’s got to be something we focus on in the coming years, and overcome the challenges that present us.”

The former Chancellor – sacked by Theresa May in July – also brushed off claims that the new prime minister had criticised his record by promising a “proper industrial strategy”.

He said: “Whenever you get new politicians in post, they always want to announce new things.

“I would look behind the blizzard of press releases to the continuity of the policy, and I see a lot of continuity.”

Earlier, Mr Osborne laughed as, alongside him, Lord Heseltine said: “We have three ministers now in charge. A brilliant set of appointments in my view, because they can come up with the answers which have escaped me.

“If all these markets have escaped the attention of British exporters, it will be marvellous to have it pointed out to them by the new minister responsible.”