The mood has turned nastier since I first visited the Big Help Project food bank in Knowsley, Merseyside, two years ago. Back then, the Brexit poison hadn’t seeped so deep. But now, when the call goes out for food donations to feed its 10,000 clients, things have changed, says Peter Mitchell, the project leader. “I get people asking, ‘Is this food for British people?’ I never used to hear that, never. It’s hideous, it makes my blood boil.”

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How does he reply? “I say this food is for hungry people.” He sighs heavily. “Brexit did this. It gives permission to copy Farage and Trump, to say things they never used to say.” He points to the rising racism in football, with a coconut thrown at a black player over the weekend. “It makes you despair. Brexit is doing this to us”.

Knowsley, which is among the UK’s poorest constituencies, is one of the hardest hit, with half of its council budget cut. The project’s 10 food banks are “thriving”: Mitchell observes the irony. This social enterprise now provides debt advice, a credit union, food and furniture shops, moses baskets of baby things for new mothers and a housing co-op. With 125 volunteers playing their part, this feels like a beleaguered community at its best in the face of terrible adversity. But Mitchell, a Liverpool councillor, despairs of new attitudes in the wake of Brexit. “I see society changing before my eyes, empowering the worst. This is the end product of Thatcher’s 1980s, where individualism has won out over collectivism: it’s all me and mine; a selfishness that comes from that idea that the private is better than the public. Politically? Apathy reigns.”

Mitchell tried to rouse people to protest against the bedroom tax, but only 300 turned up. “People have given up, turned in on themselves in their own homes.” Austerity has twined itself around Brexit like bindweed, causing hardship, embittering its victims.

Facebook Twitter Pinterest Jimmy loads a car at the The Big Help Project food bank in Knowsley Photograph: James Lacey of Dark Soul Photography

Once, the pied pipers of Brexit played tunes of hope and optimism with fantasies of buccaneering freedom, but none of that is left; not in Westminster or anywhere else. The fairy dust blew away, and now all that’s left is the dark, backward-looking nativism that underpinned it. Disappointment at the vanished new dawn has turned the remnants of the Brexit creed into angry, determined calls to just “do it”, never mind the dire consequences. The much-mocked Project Fear Treasury forecasts are already proving correct: they warned a Brexit vote would mean households losing out by £4,300 by 2030. Households are already £1,500 worse off, and becoming poorer faster than forecast, in the worst era for growth since the 1860s, according to Paul Johnson of the Institute for Fiscal Studies. Now the Osborne-Hammond screw has tightened again as the benefits freeze continues into a new fiscal year. The poor already lose an average of £340 annually, which is two months’ food shopping for an average low-income family, according to the Joseph Rowntree Foundation. By this time next year, there will be 400,000 more poor children as a result, with food banks busier than ever.

Still, the cabinet minister, Andrea Leadsom, tells the BBC’s Andrew Marr that leaving on no deal would be “not nearly as grim” as some believe. But grim it is: this country on the verge of a nervous breakdown feels grimmer than I can ever remember, on both sides of the angry Brexit divide.

This week we hover in purgatory, not in control but at the mercy of the 27 EU leaders meeting on Wednesday to decide our fate: into the abyss, or the respite of a long and flexible Brexit extension. Until that is secured, Theresa May and Jeremy Corbyn will go on making nice in an agreed charade to persuade the EU that delay could bring a cross-party pact. Let’s hope Europe chooses to believe it. The impasse is that half May’s cabinet and all her party’s grassroots will not tolerate the customs union Labour must have – call it something else, some suggest. But it’s either frictionless trade that forbids the UK striking outside deals, or it’s nothing. No verbal gymnast can pole-vault that one.

If Labour agrees on any deal without insisting voters get the final say, the party will be done for. The Change UK group fears a stitch-up where a sequence of votes allows MPs to vote yes to the customs union (they almost did already) but no to the public vote, allowing both parties to claim clean hands after a free vote with no one to blame. Both Tory and Labour members would be spitting, possibly to the point of splitting, but helpless to prevent it. However, I trust that Keir Starmer, Tom Watson, Emily Thornberry and others will guarantee Labour’s commitment: no deal without a vote. As Starmer said, the ball is in May’s court: can she ever bend?

Assuming the extension, if there’s no deal by 22 May, the EU elections will be a proxy referendum. That’s May’s best threat to terrify her deranged tendency, but both parties have much to fear. Prof Robert Ford, one of the sharpest political analysts, expects Nigel Farage’s new Brexit party to storm the barricades, dragging the Tories ever rightwards, further towards nationalism and xenophobia, further than ever from modernising. YouGov shows the Tories now only have a majority among over-51s, a moribund party.

Unless Labour campaigns as an undisputed remain party, it too will be trampled under the wheels of Change UK, the Greens and Lib Dems. A Corbyn campaign barn-storming the country with pro-EU passion stretches credulity, but equivocation and triangulation could see Labour votes haemorrhage to authentically pro-European parties, never to return.

Democracy is in a rotten state when you find the corridors of Westminster filled with MPs trembling with fright at the prospect of facing their voters. Mostly Tory, but also some Labour, MPs in leave seats fear any test in a general election, referendum or EU elections. But progressives should welcome any chance to set out the pro-European case fearlessly everywhere, to turn the tide on the dark thoughts in Knowsley.

• Polly Toynbee is a Guardian columnist