The government should put pressure on the EU by laying out plans for a 'no deal' Brexit scenario where it scraps all trade tariffs on imported goods, a group of right-wing economists has said.

Abolishing tariffs would drive down prices for consumers and stimulate competition by allowing cheap imports such as food and clothing to flood the British market, according to researchers at Policy Exchange.

The threat of the UK abolishing tariffs as part of its 'no deal' backup plan would also encourage Brussels to offer a more favourable trade agreement, the economists said.

"Many worry that pursuing unilateral tariff liberalisation would reduce the chances of achieving a strong UK-EU trade deal," wrote Warwick Lightfoot, a co-author of Policy Exchange's report, which was published today.

"Conversely however, a good deal is more likely if the UK has a realistic ‘no deal’ fallback."