An influential business group has said it is willing to back a new referendum on the Brexit deal and is demanding that the government “stop the clock” on withdrawal to avoid crashing out for the EU.

London First, a campaign group that represents 200 employers in the capital and counts the chief executives of Deloitte, Legal & General and Capita among its board members, withdrew its support for Theresa May’s Brexit deal on Monday.

The group said a meaningful parliamentary vote on the prime minister’s offering looked increasingly likely to be defeated. If the government loses the vote it must revoke Article 50 in order to buy time to negotiate a better deal for the UK, London First said, adding that if no workable plan can be developed, the people must have their say.

The move will come as another blow for the embattled Ms May. The prime minister’s deal was “far from perfect” but had been supported by London First as the only option for businesses desperate to avoid crashing out of the EU on 29 March.

The Independent, along with the People’s Vote campaign, has backed a Final Say referendum on the Brexit deal.

London First chief executive Jasmine Whitbread said the country is now “teetering on a cliff edge”.

She said: “Time has run out and continuing to head towards a no deal is irresponsible, irrational and risks further damage to jobs and growth.

“If we don’t have a deal next week, it’s time to stop the clock and revoke Article 50, so the Government can stop spending billions on last-ditch efforts to manage a no deal and instead come up with a plan that works.

“If such a plan cannot be found, the decision must go back to the people. Continued uncertainty is never welcome, but it will be vastly less damaging than crashing out of the EU.”

Research commissioned by London First suggests that just 41 per cent of businesses feel they’ve been able to plan effectively for Brexit.

The group argues that falling back on World Trade Organisation (WTO) rules would mean “huge practical and logistical problems” for UK companies.

The latest bad news for the government’s Brexit plans came as preparations for no deal descended into farce this week as dozens of lorries occupied a disused airfield in Kent in a “live test” of how ministers plan to ease congestion on roads to Channel ports.

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The Department for Transport (DfT) confirmed that just 89 drivers, each paid £550 to take part in the test, showed up out of an expected 150.