Philip Hammond has said the government will have to abandon the economic plans he will lay out in Monday’s budget, supposedly marking the end of austerity, in the event of a no-deal Brexit.

In an interview with Sky’s Sophy Ridge on Sunday, the chancellor said the proposals being announced on Monday afternoon were based on the assumption that there would be a Brexit deal and that, if that turns out to be wrong, there would have to be a new, emergency budget.

In a strong hint that this would involve significant tax cuts, pushing the UK toward a so-called Singapore-style economic model, Hammond said the government would need a “different strategy for the future”.

John McDonnell, the shadow chancellor, said he was shocked by the remarks, which he said showed Hammond was reverting to a plan first floated in January 2017 to turn the UK into a corporate tax haven in the event of the EU refusing to cooperate on a trade deal.

Hammond said in his interview that he was very confident the UK would negotiate a deal with the EU including “frictionless access to European markets on a reciprocal basis”.

When asked what would happen if there was no deal, he replied: “If we don’t get a deal, if we were to leave the European Union without any deal – and I think that’s an extremely unlikely situation but of course we have to prepare and plan for all eventualities as any prudent government would – if we were to find ourselves in that situation then we would need to take a different approach to the future of Britain’s economy.

“Frankly we’d need to have a new budget that set out a different strategy for the future.”

Asked if there would be less money available for government departments, he replied: “We would have to wait and see what the situation was. If we left the European Union without a deal we would want to see how markets and businesses and consumers responded to that.

“And then, as any responsible government would, we would take appropriate fiscal measures to protect the economy, to prepare us for the future and to strike out in a new direction that would ensure that Britain was able to succeed whatever the circumstances we found ourselves in.”

Hammond did not elaborate on the fiscal measures he might introduce, but economists expect he would introduce substantial tax cuts, funded by borrowing, to minimise the risks of recession, as the Labour government did in 2008 when it slashed VAT.

Nor did the chancellor spell out on Sky what he meant by a different economic strategy in the event of a no-deal Brexit, but he seemed to be referring to a move towards a low-tax, low-spending, low-regulation economic model of the kind favoured by some Brexiters on the Conservative right.

He floated the option last year, but ministers have played it down more recently, stressing their commitment to maintaining workers’ rights and the welfare state.

Asked later in a BBC interview if his alternative strategy would involve a Singapore approach, Hammond said: “What I was saying [in January 2017] was nothing other than a statement of the blindingly obvious. If our businesses are no longer able to trade with European Union neighbours, if their supply chains are cut off, they will have to find different markets and different ways of doing business.

“And of course the government, any government, would want to support them in doing that and ensure that we do everything we can to facilitate what will be a very big transition in the way the UK economy works.”

Hammond also declined to reject outright a suggestion that, even if there is a deal, the UK would be worse off after Brexit. When it was put to him that this would be the case even under the government’s Chequers plan, he said having a deal with low friction at and behind borders would “minimise any negative effect on the UK”.

McDonnell said Hammond “seems to have accepted a no-deal Brexit, and he does want us to be like Singapore, a tax haven, which will undermine our manufacturing and I think put people’s living standards at risk”.