Former chancellor Philip Hammond’s attack on Boris Johnson’s hedge-fund backers has been supported by a former top Treasury civil servant, as financial experts raise concerns over the PM’s links to the City.

Nick Macpherson, former permanent secretary to the Treasury, said Hammond was right to question the political connections of some of the hedge funds with a financial interest in no deal.

“They are shorting the pound and the country, with the British people the main loser,” Macpherson warned, after Hammond wrote that some of Johnson’s City supporters have bet billions of pounds on a hard Brexit.

Nick Macpherson (@nickmacpherson2) Mr Hammond is right to question the political connections of some of the hedge funds with a financial interest in no deal. They are shorting the £ and the country, with the British people the main loser. #soundmoney https://t.co/Ncn5IR48hK

Hammond also claimed over the weekend that such funds would be happy to see “scant progress” ahead of the 31 October deadline to leave the EU, or seek an extension. One government minister was quick to dismiss Hammond’s allegations, but they raised fears that the prime minister faces a conflict of interest.

“Many hedge-fund managers see Brexit (including the no-deal variety) as an opportunity from which they obviously hope to profit, and they are positioning their portfolios accordingly,” said financial commentator and author Frances Coppola.

Johnson received five-figure donations from several leading fund managers during the Conservative leadership race, some of whom also backed the Leave campaign.

“Those who donated to Johnson’s campaign aren’t necessarily trying to influence policy: they may simply see him as the best hope of getting the Brexit they want. But financial backing from people who hope to profit from Brexit creates a conflict of interest for Johnson, since it puts psychological pressure on Johnson to deliver what his backers want rather than what is in the best interests of the country,” Coppola warned.

The Financial Conduct Authority declined to comment on Hammond’s claim. The FCA is responsible for regulating short-selling in the UK. This is the practice by which investors bet against a stock by borrowing its shares, selling them, and hoping to buy them back at a cheaper price.

Facebook Twitter Pinterest City grandee and hedge fund manger Crispin Odey, backed Boris Johnson and supported Brexit. Photograph: Harry Borden/Contour by Getty Images

The FCA maintains a database of short positions, which show that more than 130 investors have built up more than 500 bets against London-listed companies, such as outsourcing group Kier and motoring assistance group AA.

For example, Odey Asset Management has taken short positions against homebuilder Berkeley Group and shopping centre landlord Intu. The property sector is seen as particularly vulnerable to a no-deal Brexit, which would hurt consumer spending and deter people from moving house.

City grandee and hedge fund manger Crispin Odey, who runs the fund, has publicly backed Boris Johnson and supported Brexit.

But Odey also holds short positions in Debenhams and Metro Bank, who are both under pressure due to non-Brexit issues.

Also, so-called ‘long/short’ fund managers, such as Odey, often bet against a particular company by shorting it, and buying its rivals. This strategy can pay off regardless of macro-economic conditions, if the company in question underperforms the rest of the sector.

The Financial Times has disputed the notion that a no-deal Brexit is a hedge fund conspiracy.

“Equity outcomes are explicitly uncertain – what is a short position on a “no deal Brexit”? A short position on any company? A short position could also be a play on remain. For instance, a company might benefit from a stronger dollar, or less EU regulation,” FT Alphaville explained.

The pound plunged after the 2016 referendum, and typically weakens whenever a no-deal Brexit looks more likely.

Bets against sterling have soared since the EU referendum, hitting a two-year high in August according to data from the US Commodity Futures Trading Commission. But this may indicate that investors are trying to protect themselves from Brexit, as much as to profit from it.

Hammond said in the Times that “Johnson is backed by speculators who have bet billions on a hard Brexit – and there is only one option that works for them: a crash-out no-deal that sends the currency tumbling and inflation soaring.”

Business minister Nadhim Zahawi claimed this “ugly smear” was completely untrue.

Philip Hammond (@PhilipHammondUK) Nadhim, calm yourself: I made no reference to “interference”. I observed 3 things:

1) Boris has backing from hedge fund managers;

2) Some of those will have bet on No Deal;

3) Those that have will be happpy to see scant progress towards a deal.

Which of these 3 is incorrect?

The claim has also been promoted by the prime minister’s sister, Rachel. She told the BBC’s World At One that “people who have invested billions in shorting the pound or shorting the country in the expectation of a no-deal Brexit” could be driving the government’s strategy.

John McDonnell, the shadow chancellor, has written to the cabinet secretary, Sir Mark Sedwill, asking if there may be a conflict of interest in Johnson’s acceptance of support from hedge funds that could gain from an economic shock.

The financial markets have become increasingly jittery about Brexit risks in recent months, following Johnson’s claim that Britain would leave the EU on 31 October ‘do or die’.

Earlier this month, the Byline Times claimed that Johnson’s backers had taken more than £8bn of “aggregate short positions” against the pound. However, its claim that hedge funds had recently ramped up their short positions was dismissed by Full Fact, the independent fact-checking charity.