Chancellor: UK will not 'lie down' if shut out of Europe's single market
Britain could be forced to change its economic model if it is locked out of the single market after Brexit, the Chancellor has said.
Philip Hammond said he was "optimistic" of a reciprocal access deal, but was not prepared to "lie down" and accept it if the market was "closed off".
He told German Welt am Sonntag newspaper: "If Britain were to leave the European Union without an agreement on market access, then we could suffer from economic damage at least in the short-term."
"If we are forced to be something different, then we will have to become something different," he added.
"The British people are not going to lie down and say, too bad, we've been wounded. We will change our model, and we will come back, and we will be competitively engaged."
Hammond suggested that a move away from a European-style system would be needed and that this could involve cuts to corporation tax.
Hammond's comments came amid fresh reports Mrs May is preparing to set out plans for a "hard Brexit"on Tuesday.
The prime minister is expected to say that the UK is prepared to leave the single market, the customs union, and the European Court of Justice.
Downing Street would not be drawn on the claims but the Sunday Telegraph quoted a government source as saying: "She's gone for the full works. People will know when she said 'Brexit means Brexit', she really meant it."
When about Hammond's comments on the BBC's Andrew Marr Show, Mr Corbyn said: "It seems to me a recipe for some kind of trade war with Europe in the future. That really isn't a very sensible way forward."
He also said May appears to be "heading us into a sort of bargain basement economy on the shores of Europe".
"We will lose access to half of our export market, it seems to me an extremely risky strategy," Corbyn added.
Meanwhile, Liberal Democrat leader Tim Farron claimed the prime minister is starting the Brexit process by "waving the white flag" over membership of the single market.
"I certainly take the view that heading for a hard Brexit, essentially that means being outside the single market and the customs union, is not something that was on the ballot paper last June, he told BBC One's Sunday Politics.
Former Ukip leader Nigel Farage also said he had doubts about May's strategy.
I'm quite certain Theresa May will do what she always does - sound very reassuring,she will look to be very much in control, saying all the right things and people like me will say it sounds great but why is it taking so long?
"I'm yet to be convinced, I have to say," he added.