A CHAOTIC no-deal Brexit increases the likelihood of Nicola Sturgeon calling a second independence referendum, an SNP minister has said.

Energy minister Paul Wheelhouse said the chance of the First Minister demanding a new vote would be higher if the UK crashed out the EU without a trade and customs deal.

Ms Sturgeon is due to update Holyrood on her plans for a referendum in October.

Last year, after resetting her original plans after SNP general election losses, she said she would set out a “precise timetable” in the autumn.

However with continued confusion over the terms of Brexit and potential delays in talks, she admitted this week that she didn’t know what she would say.

Speaking to the BBC in Aberdeen, Mr Wheelhouse was asked about the likelihood of a second referendum being called in the current circumstances.

He said: “The First Minister said she will review the situation in October.

“Clearly, the chances of that happening are higher the more the UK government pushes us down a line of no deal and cutting our ties to… the European single market.

“People who are not necessarily sympathetic to the SNP are increasingly angry with the position the UK government has taken and the risk of a ‘no deal’ is focusing people's minds on perhaps the better opportunities there may be through independence."

The pound rebounded on Thursday after a report EU leaders were mulling a compromise that would avoid a no-deal by letting the UK opt out of free movement, but stay in the single market for goods.

However the idea came with a big catch.

In return for the EU dropping its resistance to cherry picking parts of the single market, the UK would have to replicate all future EU rules on environment, customs and social protection.

As this would effectively prevent the UK “taking back control”, the trade-off is unlikely to be backed by Westminster, but it does at least suggest an openness to new thinking.

Meanwhile, Theresa May has been forced to reassure Conservative party members that her Chequers plan for a soft Brexit is not a sell-out to Brussels.

In a three-page letter addressing the “strong feelings” in the rank and file, the Prime Minister insisted her proposals were “in no sense a concession” to the EU.

However she also said Brexit “requires pragmatism and compromise from both sides”.

The exercise, estimated to have cost the Tory party around £70,000, comes amid a grassroots backlash to the Chequers deal, which would see the UK maintain a common rule book with the EU on goods and agri-foods, but diverge on services and migration.

David Davis quit as Brexit Secretary and Boris Johnson as Foreign Secretary after the plan was agreed last month, and it has been criticised by other Brexiters as a betrayal.

Mrs May admitted “party members have raised a number of questions” about her plan for a bespoke deal, and she wanted to “address them directly”.

She said: “I know that some people are concerned that this common rule book will stop us doing trade deals. I can assure you that this is not the case - and I would not be proposing it if it would.”

She acknowledged a common rule book “would mean we could not drop our regulatory standards for goods” in new trade deals with other countries, but said the government didn’t want to do that anyway, as it wanted to “protect British consumers”.

“I am well aware of the strong feelings members of our Party have on this national issue.”

In recent weeks, Downing Street has held briefing sessions for Tory branch chairs, with Mrs May taking part in a conference call Q&A with association chairmen.

She insisted the UK would take back control of its money, laws and borders and begin “an exciting new chapter in our nation’s history”.

She rejected both the EU’s options, saying one would mean a separate status for Northern Ireland and “break up the UK”, which was unacceptable to her as a “proud Unionist”.

She also said Norway-style membership of the European Economic Area would continue free movement, “vast annual payments” and alignment with EU rules.

She said: “I remain clear that no deal is better than a bad deal - and we are stepping up our ‘no deal’ preparations.

The letter was accompanied by a series of endorsements by senior Tories, including pro-Brexit cabinet members and Leave campaigner Ruth Davidson.

The Scottish Tory leader said the Chequers plan was a “sensible compromise approach”.