Britain will refuse to pay £40bn Brexit bill if EU won’t cut a trade deal, David Davis warns

BRITAIN will refuse to pay the £40billion Brexit divorce bill if we don't strike a trade deal with the EU, David Davis said today.

His pledge came as top Brexiteer Jacob Rees-Mogg warned ministers it would be a "national humiliation" as bad as the Suez crisis if they backed down in talks with Europe.

And in a further development, Jeremy Corbyn's right-hand man refused to rule out a second referendum on Brexit.

Asked if he would threaten to hold back the promised divorce bill of £40billion, Brexit Secretary Mr Davis told the BBC's Andrew Marr show: "In theory, if we don't get the future deal."

Mr Davis also insisted ministers would continue to prepare for the possibility of crashing out of the EU without a trade deal.

He said: "You can never stop making arrangements because that's one of the things that guarantees a deal.

"You have house insurance - you don't expect your house to burn down, it's less than a one in 100,000 chance, but you have house insurance anyway."

He added that getting a trade deal would help solve problems about the Irish border.

In a speech this week, Mr Rees-Mogg - leader of a large group of pro-Brexit Tories - will warn ministers to hold firm in talks with the EU or face disaster.

He is expected to say: “What would that mean for this nation? If we were not to leave, if we were to find a transition bound us back in?

“Well it would be Suez all over again. It would be the most almighty smash to the national psyche that could be imagined.

“It would be an admission of abject failure, a view of our politicians, of our leaders, of our establishment that we were not fit, that we were too craven, that we were too weak to be able to govern ourselves and that therefore we had to go crawling back to the mighty bastion of power that is Brussels."

The Suez crisis of 1956, which saw Britain fail in a bid to regain control of the Suez Canal in Egypt, was a historic blow to the UK's image as a world power.

Mr Rees-Mogg will say in his speech: "It infused throughout the body politic the view that the best we could do was to manage decline.

"Margaret Thatcher tried to break away from that but it was such a strong feeling that once she had gone it seeped back again."

Speaking on Marr, Labour's deputy leader Tom Watson said it was "highly, highly, highly unlikely" the party would perform a U-turn and back a second Brexit referendum - but refused to rule it out altogether.

He added: "You should always try keep your options open in a negotiation."

Mr Corbyn sacked Owen Smith from the shadow cabinet on Friday night for calling for a second referendum.