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The Chancellor of the Exchequers issued a stark warning to Boris Johnson and Jeremy Hunt, the two remaining Tory MPs taking part in the Conservative leadership contest. Mr Hammond, who voted Remain in the 2016 EU Referendum, said the UK would suffer "permanent" consequences if they chose to leave the European Union without a deal in place.

Speaking at London's Mansion House, Mr Hammond said: "The winner of the contest must not abandon this achievement, the fiscal responsibility. "Last week I called on the leadership candidates to pledge at the very least to keep our national debt falling in each of the next five years and to keep cyclically adjusting borrowing below 2 percent of GDP for at least the next two years. "Neither of the two remaining candidates has yet signed up to that pledge. "But despite my media persona, I’m an eternal optimist so I reiterate that call tonight and I look forward to their calls later on in the evening. READ MORE: Express.co.uk poll: Who do YOU want as next Tory leader? Have your say on Johnson or Hunt

Philip Hammond warned against pursuing a no deal Brexit

"Accepting that pledge doesn't mean there won’t be extra money to spend. "As I said during the Spring Statement, if we leave the EU in a smooth and orderly way, the fiscal edge room I’ve built up, means an incoming Prime Minister will have scope for additional spending or tax cuts. "But there is a caveat, a damaging no deal Brexit would cause short term disruption to our economy, soaking up all the fiscal edge room we built and more, and while fiscal and monetary policy interventions could help to smooth that path to oppose no deal Brexit economy, both could only be temporary and neither could prevent the economy from being permanently smaller than if we leave with a deal. "So very is a choice - either we leave with a deal or we preserve our future fiscal space, we can’t do both." FOLLOW EXPRESS.CO.UK BELOW FOR LIVE UPDATES:

10.45pm update: Philip Hammond attacked for no deal comments Simon Clarke, a Conservative Eurosceptic MP, slammed Philip Hammond for his pledge to "fight" a no deal Brexit and suggestion the next Prime Minister should leave the door open to a second referendum. He said: 'This is wrong on every level. Wrong because it would shatter faith in politics. "Wrong because it would usher in a ruinous Government led by Jeremy Corbyn. "And wrong because it would not bring resolution to the issue - if a second referendum, why not a third? Terrible."

10.15pm update: The technical advisory group met for the first time today Experts from Rolls Royce, Queens University and the Police Force of Northern Ireland are part of a 15-member technical advisory group which met for the first time today in a session chaired by Brexit Secretary Steve Barclay and Treasury Minister Jesse Norman. The group will advise the Government on arrangements that could help keep the Irish border invisible post-Brexit. In a statement, the Department for Exiting the EU said two other groups - one comprising business interests and the other politicians - would soon be announced with a budget of £20m for their work. 9.40pm update: Philip Hammond suggest next Prime Minister should leave the door open to a second referendum During his speech at Mansion House, Philip Hammond said: "It may be that I'm wrong, and a new leader will persuade Parliament to accept the deal it has already rejected, or that the European Union does a 180-degree U-turn and reopens the Withdrawal Agreement. "If your plan A is undeliverable, not having a plan B is like not having a plan at all. "If the new Prime Minister cannot end the deadlock in Parliament, then he will have to explore other democratic mechanisms to break the impasse."

A technical advisory group has been set up to advice the Government on alternatives to the backstop

9.10pm update: Philip Hammond warns Tory leadership hopeful against pursuing a no deal Brexit Speaking at London's Mansion House during the annual Bankers and Merchants Dinner, the Chancellor of the Exchequers said: "As I said during the Spring Statement, if we leave the EU in a smooth and orderly way, the fiscal edge room I’ve built up, means an incoming Prime Minister will have scope for additional spending or tax cuts. "But there is a caveat, a damaging no deal Brexit would cause short term disruption to our economy, soaking up all the fiscal edge room we built and more, and while fiscal and monetary policy interventions could help to smooth that path to oppose no deal Brexit economy, both could only be temporary and neither could prevent the economy from being permanently smaller than if we leave with a deal. "So very is a choice - either we leave with a deal or we preserve our future fiscal space, we can’t do both." Mr Hammond's speech came after 41 climate change activists gatecrashed the black and tie event. READ MORE: Philip Hammond speech interrupted by climate change protestors - ‘This is an emergency!'

Philip Hammond's speech was gatecrashed by activists

8.10pm update: Labour Party lashes out at Tory leadership contest's final two Andrew Gwynne, the Labour Party national campaign coordinator, attacked Jeremy Hunt and Boris Johnson after they became the final two of the leadership race. He said: "What a choice: the man who broke the NHS or the man who wants to sell it to Donald Trump. "A handful of unrepresentative Conservative members should not be choosing our next prime minister. "People should decide through a general election."

Boris Johnson vowed to deliver Brexit on October 31

7.30pm update: Boris Johnson favourite to replace Theresa May among members - poll Boris Johnson has been one of the favourite MPs to replace Theresa May among Conservative Party members. In a survey carried out in April by ConservativeHome asking who would members choose between Jeremy Hunt and Mr Johnson, the former Foreign Secretary won by a landslide, beating the Cabinet member by almost two to one - 61 percent against 33 percent. CAST YOUR BALLOT: Express.co.uk poll: Who do YOU want as next Tory leader? Have your say on Johnson or Hunt 6.25pm update: Boris Johnson celebrates today's victory at the fifth round of voting pledging to deliver Brexit Brexiteer Boris Johnson, who gained 160 votes out of 313 at the fifth round of voting, celebrated today's victory on Twitter. He wrote: "I’m deeply honoured to have secured more than 50 per cent of the vote in the final ballot. "Thank you to everyone for your support! I look forward to getting out across the UK and to set out my plan to deliver Brexit, unite our country, and create a brighter future for all of us."

Boris Johnson won 160 votes at the fifth round of voting

6.05pm update: Boris Johnson continues to lead the Tory leadership race Boris Johnson gained 160 votes at today's latest round of voting. Michael Gove has been eliminated as he gathered 75 votes against Jeremy Hunt's 77. 5.25pm update: David Lidington warns against a no deal Brexit in last plea before Tory leadership's finalist are named David Lidington, who previously backed Rory Stewart, implored candidates to "look beyond Brexit" as the Conservative Party is "facing an existential crisis" and needed to find younger supporters. He also warned the Union was under threat, both in Scotland and Northern Ireland, from a no-deal Brexit in particular. He said: "I certainly believe a no-deal would add to the risks to the Union. "We have to be confident about demonstrating the benefits of the Union for every part of the Union."





David Lidington said the Union was under threat from a no deal Brexit

4.45pm update: Ireland's Leo Varadkar says leaders have ‘lost patience with UK’ Ireland's Prime Minister Leo Varadkar signalled the EU27 aren't willing to grant another extension to the UK unless the country holds a general election or a second referendum. He told ahead of the EU summit: "While I have endless patience, some of my colleagues have lost patience with the UK and there is enormous hostility to a further extension." An extension to Article 50 must be granted unanimously by all the members of the European Union. READ MORE: EU kills off Boris Brexit plan as Varadkar says leaders have ‘lost patience with UK’

Leo Varadkar said the EU27 are 'hostile' to the idea of granting an extension to the UK

3.40pm update: Theresa May vows to keep alive a deep partnership between the UK and the EU even after Brexit Theresa May says her party will continue to "maintain a close and deep partnership with the EU". The outgoing Prime Minister, who is today attending her last EU summit as Prime Minister, said: "Of course we will be looking as we leave the EU to maintain a close and deep partnership with the EU in the future. "First of all there is a leadership election taking place obviously there are further votes taking place this afternoon and then the question of the leadership of the Conservative party will go to the members of the Conservative party across the country as regards the meeting here we will be looking for the UK to do what we have always said we would do which is to make a constructive contribution as we remain a member of the EU for that period of time we will continue to meet our rights and obligations but of course we will be leaving the EU and we look forward to developing a close partnership with the EU when we've left. "I will continue to do what we have always done as the UK which is to play a constructive role within the EU while we're a part of the discussions around the table. "Of course in the future the UK will be taking a different role because we'll be outside the EU we'll be forging that way as global Britain an independent sovereign state and we will be dealing with many of the same challenges that we'll be talking about today such as climate change and external relations."

Theresa May at today's EU summit

3.15pm update: David Davis explains why the UK must keep a no deal on the negotiating table The former Brexit Secretary explained the UK should not actively seeking a no deal Brexit, but must be willing to defend it to have the EU agreeing to strike a better deal. He wrote in the Daily Telegraph: "Only by seriously preparing and contemplating leaving without a deal can the UK persuade the EU to agree to a better deal. "We should not seek no deal, but we must be willing to have no deal if our partners are unreasonable. "That is the best way to get a deal. "I have consistently said this and indeed paradoxically if the EU had seriously believed the UK was comfortable with leaving without a deal, we would now be looking at a much better deal." Alice Scarsi takes over the liveblog from Latifa Yedroudj

2.50PM update: Italy's Prime Minister warns to prepare for a no-deal Brexit Italy's Giuseppe Conte warned businesses and the general public to prepare for a no-deal Brexit, as the remaining three Tory candidates scramble for the crown to become the next UK Prime Minister. Speaking in the Chamber of Deputies regarding the next Council of Europe, he said: "On the Italian side, the Brexit decree on the rights of citizens, financial services and air transport was converted into law. "Last week we gathered the Brexit task force at Palazzo Chigi: we remain committed to an orderly Brexit through a withdrawal agreement and to build a deep and ambitious future relationship with the United Kingdom after exiting the European Union, but in light of the latest developments it is important that citizens and businesses use the months of extension until October 31, 2019 to prepare themselves for any scenario, including the undesirable one of an exit without agreement". 2.30pm update: Dutch Prime Minister claims UK will be "diminished" after leaving EU with no deal In an interview with BBC radio, Dutch Prime Minister Mark Rutte also rejected the prospects of renegotiating Theresa May's Brexit deal and dismissed a time-limit on the controversial Irish backstop. He said: "With a hard Brexit - even with a normal Brexit - the UK will be a different country, it will be a diminished country. It is unavoidable because you are no longer part of European Union, and you are not big enough to have important enough position on the world stage." Mr Rutte added: "If there are no changes in all the positions, I cannot see why it makes any sense to negotiate longer. "If the position doesn't change, the only solution on the table is the current solution."

1.30pm update: Almost 700,000 EU nationals granted leave to remain in UK after Brexit Almost 700,000 people have been granted leave to remain in the UK after, according to statistics from the Home Office. Some 166,900 people applied to the Government's EU settlement scheme in May to secure their post. Out of all the successful applicants, 66% were granted settled status and 34% were granted pre-settled status. Immigration Minister Caroline Nokes said: "The EU Settlement Scheme is making really good progress and more than 800,000 people have already applied, with almost 700,000 granted status. "The scheme is simple and free and EU citizens have until at least December 31 2020 to apply so we are well on track to deliver on our promise to protect the rights of EU citizens." 1.07pm update: Boris Johnson leads Tory leadership race, Javid is out MPs have cast their votes on the four Tory candidates running as the next UK Prime Minister. Former Brexit Secretary Boris Johnson, Michael Gove and Jeremy Hunt are now through to the fifth ballot leaving Sajid Javid out of the race. Mr Johnson lead the race with 157 votes, while Mr Gove scored 61 votes. Mr Hunt finished off third with 59 votes, while Mr Javid lost at 34.

Said Javid is now out of the Tory leadership race

12.58pm update: Banks keep rates on hold with amid no-deal Brexit fears The Bank of England has kept interest rates on hold at 0.75% with rising fears of a no-deal Brexit, as UK's economic growth continues to falter. Policymakers on the Bank's nine-strong Monetary Policy Committee (MPC) voted unanimously to keep rates unchanged with concerns over the "downside risks" to growth, which increased since its last set of forecasts in May. In the minutes of the latest MPC meeting, the Bank of England said: "Downside risks to growth have increased. Globally trade tensions have intensified. Domestically, the perceived likelihood of a no-deal has risen." 12.38pm update: Downing Street slaps down Hammond's suggestion for second Brexit referendum Downing Street has dismissed a suggestion from Philip Hammond that the next Prime Minister might need another referendum to break the Brexit deadlock. In a major speech on Thursday night, the Chancellor is expected to challenge Tory leadership hopefuls including Boris Johnson to set out a "plan B" and will suggest they may have to explore "other democratic mechanisms" to end the impasse. However, Theresa May "we should get on with delivering the verdict of the first one", a Number 10 spokeswoman has confirmed. In his speech later this evening at Mansion house in London, Mr Hammond will saythat the £26.6 billion of "fiscal headroom" - which could potentially be used to increase spending or cut taxes - would be used up in a no-deal Brexit.

11.56am update: Commons to call off business for nearly six weeks despite looming Brexit deadline The chamber is expected to rise for the summer once business is completed on July 25 and return back on September 3, Commons Leader Mel Stride said. There is also a possible further recess in the month of September, despite the Brexit deadline on October 31. Mr Stride, after announcing the business for next week, said: "Colleagues will also wish to know that subject to the progress of business the House will rise for the summer recess at the close of business on Thursday July 25 and return on Tuesday September 3." Shadow Commons leader Valerie Vaz replied: "That is clearly very helpful for all honourable members." She added: "I'm pleased we now have a recess date but could the Leader of the House confirm who will be at the despatch box on Wednesday July 24? "I understand on July 22 all the (Tory leadership) results will be out, perhaps he could let us know... I think it's only fair to the outgoing Prime Minister that she knows when it's her last Prime Minister's Questions, and to us as well and to Parliament more importantly."

Banks have kept their interest rates on hold over fears of a no-deal Brexit

11.20am update: George Osborne's London Evening Standard backs Boris Johnson as PM The former Chancellor's newspaper wrote in an editorial piece today: "Twice, the Evening Standard supported Boris Johnson to be the Mayor of London. Today we back him to be the next Prime Minister." It said Mr Johnson had the best chance of "uniting this divided government" and "had the most room for manoeuvre to get the country out of the mess". They added: "First, Mr Johnson is the candidate who has a chance of uniting this divided government. "He should be under no illusion that it will be a monumental task. To avoid the fate of the outgoing Prime Minister, who laboured in office but not in power, he must harness the credibility he has with Brexiteers to the liberal internationalist credentials he displayed as Mayor." 10.45am update: Boris Johnson urged to come out against "game playing" in Tory leadership race Cabinet minister Amber Rudd is urging Mr Johnson to publicly condemn "game playing" in the Tory leadership race, as the remaining four contenders battle for the crown. Ms Rudd told BBC Radio 4's Today programme: "I find all this conversation about lending votes rather discrediting of the system. "I would really call on Boris himself to repudiate the information that is coming out of 'friends of Boris', saying this, saying one thing." The Work and Pensions Secretary, who backs Jeremy Hunt in the race for Number 10, added: "This is a serious moment. We don't need that sort of game-playing going on in Parliament." Tory MPs will choose which two candidates to send forward to the final round, as 160,000 party members cast their votes for the next UK Prime Minister.

Boris Johnson is a leading contender in the Tory leadership race

10.20am update: Ministers downplay no-deal Brexit stockpiling fears Secretary of State for the Environment David Rutley accused Labour MP Rupa Huq of "exaggerating" and said the Government is preparing for "every eventuality" during a heated commons debate. Speaking in the Commons, Ms Huq said: "In reality only just over half of the food we eat is made in Britain, with over a third coming from the EU. "Why then when the Food and Drink Federation is predicting after a no-deal fresh fruit and veg would run out after two weeks, are the remaining contenders in the Tory leadership battle continuing to entertain this damaging prospect? "Isn't scurvy back on our streets more important than the whims of fundamentalist party members' wishes?" Mr Rutley replied: "I think she's ruined a perfectly reasonable question by exaggerating. We're preparing for every eventuality. A deal is the best outcome. We all have a responsibility to help deliver that. We're preparing for all outcomes." Conservative Michael Fabricant added: "So will you confirm that my constituents in Lichfield do not need to stock up with tins of Spam or apricots in syrup?" Mr Rutley replied: "We're not going to endorse any particular brand here, I have to say. But it is important to note we have a rich and diverse source of food and that will continue when we leave the EU."

Theresa May has warned against a second Brexit referendum

9.47am update: Chancellor alerts Tory candidates - 'You need a Brexit plan B!' During a speech in London today, Mr Hammond will urge Tory candidates to set out Brexit "Plan B" today while hinting another referendum may be required to break the deadlock. He will say: "It may be that I'm wrong, and a new leader will persuade Parliament to accept the deal it has already rejected, or that the European Union does a 180-degree U-turn and re-opens the Withdrawal Agreement." But if not, candidates must set out what they will do. "If your plan A is undeliverable, not having a plan B is like not having a plan at all," he will add. Mr Hammond, who has not declared who he is backing, will call for the would-be premiers to be "honest with the public". In a hint at the possibility of a second referendum, he will say: "If the new prime minister cannot end the deadlock in Parliament, then he will have to explore other democratic mechanisms to break the impasse. "Because if he fails, his job will be on the line - and so, too, will the jobs and prosperity of millions of our fellow citizens. "

Philip Hammond warned Tory candidates to prepare a Brexit Plan B