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George Osborne today put himself at the helm of the battle against a “hard Brexit” as the Tories teetered on the brink of a new outburst of bitter infighting over Europe.

The former chancellor branded Leave campaigners — who believe other EU countries with strong trading links with the UK will simply fall in line behind a good Brexit deal for Britain — as “naive”.

He also hit out at “false prophets” promising greater security if Britain goes it alone. Millions of people risked finding themselves “permanently poorer and more insecure” if the departure from the union is bungled, he added.

Speaking in Chicago, Mr Osborne said: “Brexit won a majority. Hard Brexit did not.

“This was not a popular mandate for less free trade or for a more closed economy.”

He believes Britain is facing “the most important set of decisions since the Second World War” as it seeks to reshape its position in the world.

“Get them wrong — consign Britain to a relationship with our neighbours that makes us permanently poorer and more insecure — and the people most likely to pay the price will be precisely those who already feel the most marginalised,” he predicted.

Mr Osborne, who was accused of “Project Fear” with doom-laden economic warnings during the EU referendum campaign, backed Theresa May over the Brexit timetable as she came under growing pressure to press on with it.

Downing Street has rebuffed Foreign Secretary Boris Johnson for suggesting Article 50 would be triggered early next year to start the withdrawal process.

Mr Osborne, who like David Cameron will not be at Tory conference in Birmingham in just over a week’s time, also believes that “serious negotiations” with EU leaders will only start from next autumn after German and French elections.

He admitted that during the referendum campaign he had underestimated public concerns about sovereignty and thinks new arrangements will be needed over the free movement of people.

“Equally, I find some of the take-or-leave it bravado we hear from those who assume Europe has no option but to give us everything we want more than a little naive,” he added.

In an intervention which puts him firmly at odds with Brexit Secretary David Davis, International Trade Secretary Liam Fox and dozens of Tory MPs, he advocated “the closest possible economic and security relationship with our European partners while no longer being formal members of the EU”.

Meanwhile, Treasury minister Jane Ellison appeared to signal that Britain could seek to restrict access for EU citizens to the UK jobs market as part of a Brexit deal.

A No 10 spokeswoman said: “The Prime Minister has been clear that her objective will be to get the best deal possible for British goods and services while respecting that the British people want control over free movement.”

In his speech honouring Louis Susman, former US ambassador to Britain, Mr Osborne went on to recall how the Queen and Barack Obama sipped cocktails at the American residence in Regent’s Park in 2011. “President Obama was there in his tux’. Her Majesty the Queen was wearing her diamonds,” he reminisced. “I walked into a room full of the A-list, from Tom Hanks to David Beckham. Frankly, I was a little over-awed.

“Then Lou came up to me and said: the Queen and the President are having Martinis, you want to join them?”