Theresa May says no deal Brexit 'wouldn't be the end of the world' as she rejects chancellor’s stark warning

Theresa May has said a "no deal" Brexit "wouldn't be the end of the world", despite her chancellor's warning that such an event would seriously damage the economy.

The Prime Minister rejected fears over leaving the EU without an agreement after Philip Hammond was accused of launching another "project fear" with his claims last week.

She added that the Government is putting in place measures to ensure it can "make a success of no deal" but maintained it was still possible to agree a "good deal".

The chancellor evoked the wrath of Tory backbenchers by referring to disputed provisional analysis which claimed GDP could fall and borrowing could be around £80 billion a year higher by 2033/34 if Britain resorted to World Trade Organisation terms.

Mr Hammond said such an impact on GDP would have "large fiscal consequences".

He also said this analysis was undergoing a "process of refinement" ahead of a parliamentary vote on any deal.

Mrs May, asked about the timing and content of Mr Hammond's intervention, said she had previously labelled the data as a work in progress.

Speaking to reporters on her trade mission to Africa, the PM added: "Look at what the director of the World Trade Organisation has said.

"He said about a no deal situation that it would not be a walk in the park but it wouldn't be the end of the world.

"What the Government is doing is putting in place the preparations such that if we're in that situation we can make a success of it, just as we will make a success of the good deal I believe we're able to get and the good deal we're working to get."

Mrs May was also challenged on whether she would order her MPs to vote for no deal if her preferred approach – agreed following talks at Chequers – was not secured with the EU.

She replied: "I've said right from the beginning that no deal is better than a bad deal.

"I think it's absolutely right that the Government is putting the preparations in place for no deal because we don't know what the outcome of this is going to be.

"But alongside that what we're doing is working for a good deal.

"I believe what we've set out in the Chequers arrangement, set out in the white paper is a deal that benefits not just the United Kingdom but benefits the European Union as well."

Eurosceptic Tories have criticised the Government's proposals, which include a "common rulebook" with the EU on goods, amid fears it could restrict the UK's ability to do trade deals.

Mrs May also said the UK was working to secure a deal by October and within a timetable which meant Brexit could occur in March 2019.

On whether Tory MPs face a backlash from their local party associations for supporting a second EU referendum, Mrs May added: "I believe that what matters to local associations is what the Conservative Government is delivering for them - and what we're delivering is what the people voted for."

Mrs May also reiterated the UK Government's desire to end free movement is "non-negotiable".

Additional reporting by Press Association