Chancellor Phillip Hammond demands leadership candidates ‘be honest’ and ...

Phillip HammondPhillip Hammond is set to give his annual Mansion House speech on Thursday (Image: GETTY)

Mr Hammond, who has been Chancellor of the Exchequer since 2016, is expected to use his Mansion House speech to insist the £26billion the Treasury has built up over the last year will be wiped out in the case of no deal. All four remaining candidates have voiced support for no deal if necessary but Mr Hammond is expected to say such an exit will leave the economy “permanently smaller”. He emphasised Michael Gove, Jeremy Hunt, Sajid Javid and Boris Johnson needed to be well prepared for what happens after one of them takes office: “If your Plan A is undeliverable, not having a Plan B is like not having a plan at all.”

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Mr Hammond last month suggested a second referendum could be needed to break the deadlock and get things going, he is also set to insist the EU will not renegotiate and the Irish backstop “will not go away”.

He will say in his speech: “It may be that I’m wrong, and a new leader will persuade Parliament to accept the deal it has already rejected or that the European Union does a 180 degree U-turn and reopens the Withdrawal Agreement.

“But if I’m not… then the question to the candidates is not ‘What is your plan?’ but ‘What is your Plan B?’”

He is expected to re-iterate that

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