It is now obvious that Britain cannot and should not leave the EU. Whatever deal Mrs May secures – post-Chequers, the aim is for the softest of soft Brexits – it is a second best outcome. Britain will try to minimise self-harming economic losses while ceasing to shape the continent of which we are part. Instead, there must be a people’s vote in which we can choose to vote for this – or to vote for what is clearly the better option, which is to remain.

The insuperable political and economic difficulty is that the deal Mrs May aims to strike with the EU is inherently unstable – whatever the short-term political gain of creating cabinet unity. Britain will be within the penumbra of the EU – the customs union redubbed the UK-EU free trade area, much of the single market, subject to the European court and overtly accepting the EU’s regulatory directives – but without any ability to influence them. There will be a £39bn price tag, and ongoing payments for shadow EU membership. Jacob Rees-Mogg and his people will be right on one thing: there is no point in leaving if this is all that has been achieved.

Thus there will be a new running sore in British politics, which will cast a pall over every investment decision made by Airbus or Jaguar Land Rover and every other significant business. How long will the new settlement survive the bombardment of criticism from the mad, bad Europhobes, their press allies and shameless ministers aiming to succeed Mrs May as prime minister by courting the ageing diehards who constitute the electoral base of the Tory party? How soon will there be a tussle for the Tory crown and a general election?

At least two-fifths of every car assembled in Britain comes from the EU

There is precious little evidence that the mass of Brexiters yet own the reality that their whole case was based on sand; none of their claims can or could hold. Mrs May, the chancellor, Philip Hammond, and the business secretary, Greg Clark, will have spelled out the realities in the 12-hour stint at Chequers on Friday, denying them (their mobile phones having been confiscated) even the capacity to send a derogatory text. But back out in Brexitland, the same old canards will be resurfacing. The lack of resignations suggest some grudging acceptance – at least from the seven Brexiters in the room – that their vision of a sovereign global Britain, independently cutting trade deals while completing the Thatcherite revolution, was unadulterated claptrap. Others beyond, though, will be only too ready to fill the gap.

Yet it is crystal clear that Britain has to be in European Union’s customs union and single market. Production of cars, planes, drugs, satellites, food and drink is now delivered on a continental basis with highly integrated supply chains. At least two-fifths of every car assembled in Britain comes from the EU. No European economy can declare independence from this system. Crucially, operational, safety and environmental standards have to conform to common norms and protocols – with a system for enforcing them. Hence the European court. Leave this and there will be an investment strike and an escalating exodus of companies.

In Rees-Mogg land, none of this matters. The crazed pro-Brexit economist, professor Patrick Minford, has acknowledged that it could mean the elimination of much of what is left of British manufacturing – but all this is to be compensated with independent trade deals. With whom? And policed by whom?

One of the maddening aspects of the current debate is that no leading broadcaster seems capable of challenging the Brexiter trope about the alleged option of World Trade Organisation rules. The WTO is in an existential crisis. As the US launches its two-pronged trade war with China – one front on traditional manufactures, the other on hi-tech – the US wants to break it up. Protectionist China and the US are in no mood to strike a balanced free trade deal with the UK. The only area insulated from current madness is the EU and the 61 countries with whom it has trade agreement. In short, there is no feasible life for a middle-ranking European economic power outside the EU.

Which, with the Brexiters suffering a reverse, is the moment to press home the case for staying inside the EU. It must be accompanied (as I argue with Andrew Adonis in our book, Saving Britain) by an acknowledgment that we need better to control immigration and manage its pressures – and a wholesale programme of economic and social reform to address the phenomenal poverty and lack of economic opportunity engulfing so much of Britain, especially the parts that voted Brexit. The Brexiter reverse could be turned into a rout, complete with a people’s vote to seal the deal.

But their greatest ally remains Jeremy Corbyn and his inner circle. Labour as a pro-European party could have made the twin argument – stop Brexit, change Britain – with more credibility than any other. Instead, it has temporised and trimmed. The signals from Brussels is that the EU will take Mrs May’s new stance seriously and she will get her ultra-soft, Norway lookalike Brexit – against which the discredited band of Brexiters may fulminate but will not be able to stop.

There is the dawning of a partial reality. But how much better to go the whole way – and stay inside the governing councils of the continent of which we are unambiguously a member and whose values we share. The fight is now on to remain in the EU. Let’s go for the real deal.

• Will Hutton is an Observer columnist