Philip Hammond warns of threat to economy if MPs reject Brexit deal

His comments came as the Prime Minister travelled to Brussels with her Brexit deal under threat at home and abroad.

Mrs May will hold talks with European Commission president Jean-Claude Juncker and European Council president Donald Tusk before a summit of EU leaders on Sunday which is expected to endorse the deal thrashed out between negotiators from the two sides.

But Spanish Prime Minister Pedro Sanchez has threatened to “veto” progress without further guarantees for Madrid over the status of Gibraltar.

Mrs May also faced domestic difficulties, with her relationship with the Democratic Unionist Party looking increasingly strained as Arlene Foster’s party prepared for its conference in Belfast.

DUP leader Mrs Foster warned that the confidence and supply deal propping up Mrs May’s minority administration would have to be “revisited” if her Brexit deal gets through Parliament.

The DUP has strongly opposed the deal and the guest star at its conference will be Boris Johnson, a prominent critic of the Prime Minister’s approach and a potential rival for the Tory leadership.

The tensions over Gibraltar concern Spain’s demand that the territory’s future is considered a bilateral issue between London and Madrid rather than between the EU and UK.

Mr Sanchez has suggested that Sunday’s summit could be scrapped unless there is a breakthrough.

Mrs May has insisted her deal is in the interests of “the whole UK family” including Gibraltar.

On the domestic front, Mr Hammond’s intervention is aimed at winning over critics including more than 80 Conservative MPs – from both the Leave and Remain sides – who are threatening to vote against the agreement.

He also sought to reassure the DUP over their “understandable concerns” about the Northern Ireland backstop provisions aimed at preventing a hard border with Ireland.

Mr Hammond told BBC Radio 4’s Today programme that he believed the deal on offer was better for the UK than remaining in the EU, stressing that it would help heal the divisions caused by Brexit.

“It’s a way of leaving the European Union with minimum negative impact on our economy,” he said.

“Economics is not the only consideration – we also have to look at the political healing process, bringing our country back together because countries that are disunited and divided are not successful countries.

“If we want this country to be successful in the future, we have got to bring it back together after this process.”

He warned that a no-deal Brexit would unleash “economic chaos”, adding: “If the meaningful vote is lost we are in uncharted territory. We will be faced with potential economic chaos; I am sure we would get a very negative reaction from the business community, from investors, from the markets.

He added “we might end up with no deal, we might end up with no Brexit” if the Withdrawal Agreement is blocked by Parliament.

If the deal does pass the Commons, the repercussions could bring down Mrs May’s Government, with the DUP hinting at withdrawing the support of its MPs.

The DUP’s 10 MPs have proved reluctant to vote with the Government since the terms of the Brexit deal became known and the termination of their Westminster arrangement would be a major blow to the Prime Minister.

DUP leader Arlene Foster told the Times that Mrs May’s deal would be a worse outcome than a Labour government led by Jeremy Corbyn.

“It is, and the reason I say that is on day one of us leaving the European Union there would be no difference, we would be exactly the same as the rest of the UK, but in year five or 10 we would be different,” she said.

“If people are looking to Dublin for representation in Europe because we’re the subject of EU rules that is so dangerous in terms of the union … All the things we build the union on – the economic, the cultural, social, political and historical start to diverge.”

DUP leader Arlene Foster and deputy leader Nigel Dodds have strongly opposed Theresa May’s Brexit deal (Brian Lawless/PA)

The DUP’s Westminster leader, Nigel Dodds, will use his conference speech to stress that the confidence and supply arrangement is with the Conservative Party – rather than Mrs May herself – and urge Tory Eurosceptics to revolt against the Brexit deal.

“Our agreement is of course with the Conservative Party,” he will say. “It is incumbent therefore on all Conservatives in Parliament who recognise the importance of continuing stability and who wish to see the Government deliver its agenda to ensure it is honoured in full.”

The Daily Telegraph reported that the next stage of Mrs May’s Brexit sales pitch will be on the immigration concerns believed to have been a key factor in the Leave vote.

According to leaked Cabinet papers, the Home Office has drawn up plans to issue low-skilled migrants with 11-month visas “with restricted entitlements and rights” while they are living in the UK.

Alternative plans could allow EU migrants aged between 18 and 30 to live and work in the UK for two years, with a strict cap on numbers.

The Government will abolish the cap on highly skilled “tier 2” migrants entirely, the report said, with the plans set out in the week beginning December 3 – a week before the crunch Brexit vote is expected in the Commons.