Shadow public health minister Luciana Berger wrote on Twitter:
Sugar tax is not fair.Most senior health officials clearly in despair at collapsing Responsibility Deal & Ministers caving into big business
Chief Medical Officer's sugar tax call is a clear sign the Govt's flagship public health policy is failing people across the country
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The chancellor now faces the prospect of forming a minority government or calling for a snap election.
The 73-year-old said a return is unlikely "given the politicised atmosphere that seems to have afflicted our set."
Chancellor Philip Hammond said the UK will make a financial proposal to the EU in the next three-and-a-half weeks.