Theresa May faced fresh warnings and pressure over the shape and content of the final Brexit deal as crunch Cabinet talks at Chequers loom.
With little more than a day to go before senior ministers meet in Buckinghamshire to thrash out a white paper, ministers are said to be sceptical about the so-called “third way” to solve the customs issue on the Irish border.
The proposed “facilitated customs arrangement” would see technology used to determine where goods arriving into the UK will ultimately end up.
This would allow the correct tariff to be paid – either at the UK or EU rate.
According to the Financial Times, Brussels will express concern about the reliance of this plan on untested technology and will question how it is not “an open invitation to smugglers”.
Meanwhile, Jaguar Land Rover (JLR) warned that a “bad” deal on Brexit could cost it £1.2 billion every year.
It follows similar warnings in recent weeks from Airbus and BMW who have voiced concerns about the impact of a no-deal Brexit on UK jobs and investment.
The Prime Minister is trying to find a compromise that will secure support from both wings of her Cabinet on Friday, but critics called for the Government to maintain its red lines on leaving the single market and customs union.
A group of more than 40 Eurosceptic Tories met Chief Whip Julian Smith on Wednesday to air their concerns about the prospect of a soft Brexit which would restrict the UK’s freedom to diverge from EU rules in future.
Mrs May heads to Berlin for talks on subjects including Brexit with Chancellor Angela Merkel on Thursday, leaving behind a bitterly divided party and Government.
The intervention from JLR saw it warn of “an unpredictable future” for it and its suppliers without “free and frictionless trade with the EU and unrestricted access to the single market”.
Chief executive Dr Ralf Speth, said: “We urgently need greater certainty to continue to invest heavily in the UK and safeguard our suppliers, customers and 40,000 British-based employees.
“A bad Brexit deal would cost Jaguar Land Rover more than £1.2 billion profit each year.
“As a result, we would have to drastically adjust our spending profile. We have spent around £50 billion in the UK in the past five years, with plans for a further £80 billion more in the next five.
“This would be in jeopardy should we be faced with the wrong outcome.”
The Daily Telegraph reported that Mr Davis had written to Mrs May, arguing that her new plan to reconcile warring factions over customs arrangements would be rejected out of hand by the EU.
In an attempt to address concerns, Mrs May said at Prime Minister’s Questions the Government would ensure “we are out of the customs union, that we are out of the single market, that we are out of the jurisdiction of the European Court of Justice, we are out of the Common Agricultural Policy, we are out of the Common Fisheries Policy, we bring an end to free movement, we take control of our borders, we have an independent trade policy”.
Her comments came after Jacob Rees-Mogg hit out at reports suggesting the meeting of Cabinet ministers at Chequers would be asked to support close continued alignment on rules for goods and tariffs.
“It’s hard to think of a worse idea,” he told the BBC’s Daily Politics.
Adopting EU tariffs would be “abandoning the benefit of Brexit” and “a really foolish policy” because it would curtail the UK’s ability to strike its own trade deals.
Asked if he would be prepared to rebel if the Cabinet’s conclusions at Chequers were unacceptable to him, Mr Rees-Mogg said: “If the agreement from the Cabinet is that we will give the EU £39 billion merely on good faith of the EU’s negotiating a trade deal, I will vote against that. I don’t think I can be clearer than that.”
The subsequent meeting with the Chief Whip was used by the ERG MPs to spell out their demands for the forthcoming White Paper, stressing that there must be no watering down of the position set out in the Conservative manifesto.
There was also widespread concern among the MPs about the role being played by Olly Robbins, the Prime Minister’s Europe adviser and the senior official involved in negotiations with Brussels.
And there were demands for a greater emphasis to be placed on preparing for a “no deal” Brexit.
Tory MP Andrea Jenkyns urged Cabinet Brexiteers to stand up for Leave voters – and referred to the jockeying for position to succeed Mrs May.
In a message on Twitter aimed at Boris Johnson, Michael Gove, Penny Mordaunt, Liam Fox, Andrea Leadsom and Chris Grayling, she urged them to “show your steel on Friday”.
“We know some of you want to be the future party leader,” she said.