Treasury coffers will take a £66 billion annual hit if Britain goes for a so-called hard Brexit, Cabinet ministers have been warned.

Leaked Government papers suggest leaving the single market and switching to World Trade Organisation (WTO) rules would cause GDP to fall by up to 9.5 per cent compared with if the country remained in the European Union.

The draft Cabinet committee paper seen by The Times is based on forecasts from the controversial study into the predicted impact of quitting the EU published by George Osborne in April during the referendum campaign.

Although the then chancellor faced widespread criticism over the report, the Treasury stands by its calculations, according to The Times.