Minister for Brexit accuses Treasury officials of trying to 'undermine' Brexit negotiations

David Davis, the Secretary of State for Exiting the European Union, has reportedly accused Treasury officials of attempting to damage Brexit negotiations by leaking “worst-case scenario” draft cabinet papers.

The document claims the Treasury could lose £66 billion in tax revenues if the UK leaves the European Single Market.

Mr Davis, along with other prominent Leave campaigners, has accused the Treasury of risking the United Kingdom’s economic stability at a time when the pound is plummeting.

The draft papers present the worst-case scenario of Britain leaving the EU. They claim the UK’s national income could fall by 9.5 per cent if it leaves the single market and is forced to rely on World Trade Organisation rules.

This would mean UK households would be on average £4,300 worse off 15 years after Brexit.

The leaked figures are, however, based on the same forecast that former Chancellor George Osborne used during the Remain camp’s so-called “Project Fear” referendum campaign.

"[Mr Davis] thinks it is pulling the rug from beneath us," a source told The Daily Telegraph.

"It fits in with a succession of treasury briefings that are damaging negotiations."

The leaked Treasury papers state: “The net impact on public sector receipts — assuming no contributions to the EU and current receipts from the EU are replicated in full — would be a loss of between £38 billion and £66 billion per year after 15 years, driven by the smaller size of the economy.”

The Secretary of State for Exiting the European Union this week signalled he wants the UK to leave the EU Single Market and pursue a “hard Brexit”.

There has been speculation the leaked papers reveal a tension between Chancellor of the Exchequer Phillip Hammond, who campaigned for Remain, and the three leading Leave politicians: Mr Davis, International Trade Secretary Liam Fox and Boris Johnson, the Foreign Secretary.

Jacob Rees-Mogg, a Conservative member of the House of Commons Treasury committee, told the BBC's Daily Politics: “The ''leaked'' Treasury paper is not a leaked paper - it's a very bad, basically dishonest paper it put together during the Brexit campaign.

“It's a completely stupid paper. The Treasury is undermining the Government's own negotiating position - it's really serious.

“There should be an inquiry. It's abuse of its position.”

Whitehall has allegedly claimed the paper was an early draft and the £66 billion figure has since been thrown out, reports The Daily Mail.

Bernard Jenkin, a Conservative MP who also voted Leave, suggested the Treasury “should produce a paper on the costs of staying in the EU internal market”.

Commenting on the leaked paper, a spokeswoman for Prime Minister Theresa May said: “That was research that was carried out and the figure was published some time ago that figure is on the record.

"What is important is going forward we look to make sure we have the strongest possible negotiating position."