The Prime Minister called a Brexit war cabinet meeting this week to discuss whether the UK should remain in the customs union.
It comes after the House of Lords last week defeated the Government’s Withdrawal Bill, which left the door open to the UK remaining in the EU customs union.
Speaking on CNBC, Conservative peer Francis Maude warned the Prime Minister about keeping the UK in a customs union.
He said: “I look at the two options that have been defined. The customs partnership looks pretty difficult to me and I don’t see the EU would agree to that and Britain being able to cut its own trade deals in the future.
GETTY•CNBCBrexit news: Francis Maude warned Theresa May about trying to keep the UK in the customs union
“Using maximum facilitation, using the technology and the techniques that are available to cut out the friction at customs borders, that has been hugely developed, there have been vast strides in recent years, that looks the better bet.
“The EU Commission at the moment is saying, ‘no that is not on’ and saying ‘it doesn’t work’. Quite often what has been the Commission’s position on Brexit is they state it as a fact when all they are really meaning is they have decided they don’t want it.
“This is a negotiation, I think Theresa May's position would be extremely difficult in the Conservative Party if she were to agree to something which effectively amounted to being in the customs union or something very close to that.