Lord Powell says Eurosceptic former prime minister would always have preferred to battle the EU from within, whatever the scale of her frustrations

Margaret Thatcher would never have supported Brexit or the holding of an in/out referendum, her longest-serving and most trusted former foreign policy adviser has told the Observer.

Margaret Thatcher didn’t cause Brexit – but Brexit will bring back Thatcherism | Andy Beckett Read more

Lord Powell of Bayswater, who was at Thatcher’s side during her most epic confrontations with Brussels during the 1980s, said the Eurosceptic former prime minister would always have preferred to battle the EU from within, whatever the scale of her frustrations, rather than opening the door to exit.

“Of course she got fed up with it, but I don’t believe that as prime minister she would ever have campaigned to take Britain out of Europe or had a referendum to allow that to happen,” he said. “She wanted to change Europe and she set out to change it with great vigour, but I don’t believe she would have chosen this way and she would have avoided getting trapped by the referendum promise.

“She never had any truck with referendums and frequently spoke out against them.”

Powell, who sits as a crossbencher of the House of Lords, was speaking as Theresa May headed to the G20 summit in China to spell out to world leaders her vision of a post-Brexit UK that will be open for trade talks with non-EU countries.

Powell added that he was “pole-axed” by the vote to leave on 23 June, which he regarded as a huge backwards step.

Referring to David Cameron’s decision to hold a referendum, he said: “It was a terrible misjudgment and miscalculation. I would have preferred us to stay in and continue to work for change in Europe, which was beginning to happen at a faster pace.”

His comments will anger anti-EU Tories who campaigned for Brexit, and who portray themselves as having completed the work of their political heroine. They claim she set the UK on the road to Brexit with her 1988 Bruges speech in which she warned of the dangers of ever closer EU integration.

The Bruges speech – which Powell helped to write – deepened a rift with cabinet colleagues and helped to widen policy splits that eventually led to her fall from power. But Powell has said it was never intended to suggest she wanted the UK to leave the EU.

May, who will hold bilateral meetings on Sunday with US president Barack Obama and Russian president Vladimir Putin at the G20 meeting in Hangzhou, will stress that Britain is “open for business” with countries across the globe.

On Monday she will meet with Chinese president Xi Jinping, which threatens to be overshadowed by tensions over her decision to delay the go-ahead for the Hinkley Point nuclear power project in Somerset.

In an interview recorded before leaving for China, May told the BBC’s Andrew Marr Show that despite recent good economic figures she would not “pretend that it’s all going to be plain sailing” and that “we must be prepared for the fact that there may be some difficult times ahead”.

May also uses the interview to rule out a general election before 2020.