Downing Street has warned against attempts to “reheat the arguments” of the EU referendum following claims that the Treasury has issued dire internal warnings about the impact of a hard Brexit.
Theresa May’s deputy spokesman distanced the prime minister from the suggestion that it could cost £66bn a year in tax revenues if Britain leaves the single market and has to rely on World Trade Organisation rules.
“These figures that have been quoted today aren’t new; they were around some time ago,” the spokesman said. “I’m not going to get into reheating the arguments that were made during the referendum campaign.
“The emphasis now on getting best possible deal – to recognise that the country has clearly voted to leave the European Union. It is now incumbent on the government to make sure that that process happens – and that we are mindful there must be no attempt to thwart or stall that process.”
The comments were in response to claims that figures from a projection in April, which said GDP could fall by 9.5% if the UK had to revert to WTO rules, had been used in a new document drawn up by civil servants for cabinet ministers.
The claims infuriated Brexit-supporting MPs, who argued that the Treasury assumptions in April had changed, and that civil servants were scaremongering in an attempt to block a full departure from the EU.
Stewart Wood, a Labour peer who used to work for the former chancellor and prime minister Gordon Brown, said it felt as though the Treasury was conducting a “guerrilla war inside the government against hard Brexit”.
A Treasury source refused to confirm the existence of the paper, and said the figures were old. May’s spokesman said the government was focused on preparing a negotiating position as it got ready to trigger article 50.
He did not deny that the assumptions on which the Treasury forecasts had been based had since changed and said the government would be refreshing its analysis of the potential impact of Brexit on the economy.
“That kind of work is ongoing now ... and will go on for the remainder of this year and into next year, before we trigger article 50. What you’ll see is an effort to make sure exactly where we are negotiating positions.”
He said the government was “looking ahead” and was focused on getting the best possible deal. He admitted there would be some economic turbulence as Britain left the EU but said the economy remained strong and efforts were being made to protect it during the process.
He refused to comment on the decline in the value of sterling, but said the currency did fluctuate.
The controversy comes as the Labour party prepares for an opposition day debate against the government on Brexit. Paul Flynn MP tweeted: “Treasury confirm likely Brexit yawning financial sinkhole ahead in which UK economy could fall in a tailspin of slump.”
George Osborne, the former chancellor who oversaw the preparation of the April figures, made the case for the UK to maintain the “closest possible economic relationship” with its former EU partners after Brexit.
Appearing at a select committee on industrial policy, he said No 10 faced an “interesting challenge” not to be forced into a binary choice between staying in the single market and pursuing trade deals with the rest of the world. He said increasing trade with Australia would be “no good” if this came at the expense of trade links with Germany.
Osborne appeared alongside Michael Heseltine, the former president of the board of trade, who suggested he was sceptical about ministers’ ability to find new markets for British exports to replace any business lost as a result of withdrawal from the EU.
“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,” Lord Heseltine said.
“The ability to trade seems to me to be an important part of our future. We have to find places to trade and if there are all these markets that have escaped the attention of British exporters, it will be marvellous to have them pointed out to them by the ministers responsible.”
