Mr Hammond, in Paris ahead of a G7 summit, is understood to have told allies he accepts his days in office are numbered and would soon be returning to the backbenchers. Insiders said he would rather quit than be fired by Boris Johnson, the runaway favourite to win the Tory leadership contest. Former Commons leader Andrea Leadsom is among those being tipped as a possible replacement and her Brexiteer credentials would make her a good fit in a Johnson administration. She also appears keen and told the Institute for Government last night: “Having been 25 years in finance, that would be my ideal job. I would love to be back in government.”
Mr Hammond hinted he was poised to stand down earlier this week when he told CNBC: “I will not continue in this role in the new government.
“I want to work with the new prime minister, so long as they are focused on doing things that will strengthen the UK economy and make it resilient in the future I will be fully supportive.
“If the new Government tries to drive UK over a cliff edge called no deal Brexit I will do everything I can to stop that.”
Speaking today ahead of talks with fellow G7 finance ministers, he said a report from Britain’s Office for Budget Responsibility (OBR) showed that even in the most benign version of a no deal EU exit there would be “a very significant hit to the UK economy”.
The Chancellor said: “So I greatly fear the impact on our economy and our public finances of the kind of no deal Brexit that is realistically being discussed now.”
He understood to have told Treasury officials he intends to fight no deal from the backbenches.
He is said to have told staff: “It has not escaped my attention that the next prime minister’s majority will be only three and that I will be a backbencher.
“Parliament is going to be where the action is, and I will be there on the backbenches.”
Mr Hammond clashed with hardline Brexiteer Jacob Rees-Mogg yesterday after the chairman of the influential European Research Group claimed a no deal departure from the EU could boost the British economy by £80bn a year.
The Chancellor said it was “terrifying” someone so close to Mr Johnson would think trade barriers were a good idea.
Writing on Twitter, he said: “Happy to debate scale of negative impact of No Deal on the economy – but terrifying that someone this close to a potential future government can think we’d actually be better off by adding barriers to access to our largest market.”
Mr Rees-Mogg had used a column in the Daily Telegraph to brand Mr Hammond’s negative view of a no deal Brexit – he has predicted a “hit to the Exchequer of about £90bn” – as “pure silliness”.