Tuesday 02 July 2019 4:03 pm | Updated: Tuesday 02 July 2019 4:14 pm

No-deal Brexit would cost UK £90bn, warns Philip Hammond

LONDON, ENGLAND - MAY 22: Chancellor of the Exchequer Philip Hammond leaves 11 Downing Street on May 22, 2019 in London, England. Members of the Cabinet are meeting today with growing numbers of Conservative party members calling for Prime Minister Theresa May to resign. (Photo by Peter Summers/Getty Images)

A disruptive no deal Brexit could cost the treasury £90bn – far more than is set aside to cope with such an outcome, Philip Hammond warned today.

Speaking in the Commons, the chancellor claimed that leaving the EU without an agreement would cause such a hit to the UK economy the £27bn war-chest created to deal with its impact would have little impact.

Both contenders to replace Theresa May as Prime Minister have pledged to take the UK out of the EU without a deal if they are unable to get changes to the current withdrawal agreement.

Boris Johnson has promised to take the UK out of the EU on 31 October “come what may” – dialling up the chances of a no deal Brexit.

Jeremy Hunt said on Monday he would make the decision on whether to abandon talks with Brussels on 30 September, and use some of the £27billion fiscal headroom created by Hammond to help the farming and fishing sectors cope with a no deal outcome.

Warning that money might not be enough, Hammond told MPs: “I have no doubt whatsoever that in a no-deal exit we will need all of that money and more to respond to the immediate impacts of the disruption of a no-deal exit, and that will mean there is no money available for longer-term either tax cuts or spending increases.

“But let me go further, the Government’s analysis suggests that in a disruptive no-deal exit there will be a hit to the exchequer of about £90bn.

“That will also have to be factored in to future spending and tax decisions.”

WATCH: The Chancellor confirms that in a No Deal Brexit there will be no fiscal headroom to gift a tax cut worth over £9bn to the top 10% of earners as Boris Johnson has promised. Government analysis suggests a No Deal would result in a £90billion hit to the Exchequer. pic.twitter.com/dpgzY6dCjS
— ChukaUmunna (@ChukaUmunna) July 2, 2019

Hammond has repeatedly warned against a no deal scenario.

And during Treasury questions he said such an outcome would be “bad for the UK, bad for the British economy, bad for the British people”.

He then hinted he could join with any attempts by MPs to block a no-deal Brexit, having already conceded it was unlikely he would stay as chancellor once May is replaced.

Hammond said: “We cannot however rule out that that could happen because it is not entirely in our hands but I do agree…that it would be wrong for a British government to seek to pursue no deal as a policy and I believe that it will be for the House of Commons, of which I will continue proudly to be a member, to ensure that that doesn’t happen.”