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.

Mrs May was 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.