Theresa May will reportedly use a highly anticipated speech this week to signal that the government is prepared to leave the single market to regain control of immigration, in a so-called hard Brexit.
The Sunday Telegraph said the prime minister will on Tuesday give the clearest indication yet of her plans to also leave the customs union and the jurisdiction of the European Court of Justice.
“She’s gone for the full works. People will know when she said 'Brexit means Brexit', she really meant it," a government source told the paper.
The preview of May's speech comes as chancellor Phillip Hammond suggested to German newspaper Welt am Sonntag that if Britain was shut out from European markets it would change its economic model to one of low corporation tax, hurting Europe's competitiveness in the process.
"If we have no access to the European market, if we are closed off, if Britain were to leave the European Union without an agreement on market access, then we could suffer from economic damage at least in the short-term," Hammond said.
"In this case, we could be forced to change our economic model and we will have to change our model to regain competitiveness. And you can be sure we will do whatever we have to do. The British people are not going to lie down and say, too bad, we’ve been wounded. We will change our model, and we will come back, and we will be competitively engaged."
Labour leader Jeremy Corbyn told the BBC that under May's reported plan, the UK would become a "bargain-basement economy on the shores of Europe, where we have low levels of corporate taxation – we will lose access to half of our export market".
"It seems to me an extremely risky strategy," he said appearing on BBC1's The Andrew Marr Show. "I think there needs to be more discussion, more consultation, and recognise there is a close economic cooperation with Europe that’s going to have to continue when we’re outside the EU."
Responding to the reports of the prime minister's forthcoming speech, Liberal Democrat leader Tim Farron said May was "driving the country towards a divisive and destructive exit from the European Union".
"If the UK had voted 52-48 to Remain you can bet Theresa May would never be pushing towards a hard Remain. There would be no embracing of the euro, no joining the Schengen Zone," he said.
"But the prime minister seems hell bent on ripping up everything we share with the European Union no matter how damaging that is to the UK."
On Hammond's comments to German media, Corbyn likened the chancellor's plan to a "recipe for some kind of trade war with Europe".
"He appears to be making a sort of threat to the European community saying, ‘Well, if you don’t give us exactly what we want, we’re going to become this sort of strange entity on the shores of Europe where there’ll be very low levels of corporate taxation, designed to undermine the effectiveness or otherwise of industry across Europe,'" he told the BBC.
May is also expected to use Tuesday's speech to highlight the common ground that unites the Leave and Remain camps, such as protecting and enhancing workers' rights.
MPs demanded this weekend that the prime minister reveal details of the government's negotiating plan for Brexit, including clarity on whether ministers would seek to retain membership of the single market.
However, the preview of this week's speech released by Downing Street was light on specifics, instead focusing on the theme of the country coming together to make the most of Brexit.
“One of the reasons that Britain’s democracy has been such a success for so many years is that the strength of our identity as one nation, the respect we show to one another as fellow citizens, and the importance we attach to our institutions means that when a vote has been held we all respect the result," May will say, according to excerpts of the speech released by Number 10.
"The victors have the responsibility to act magnanimously. The losers have the responsibility to respect the legitimacy of the result."
She is expected to add: “So the country is coming together. Now we need to put an end to the division and the language associated with it – Leaver and Remainer and all the accompanying insults – and unite to make a success of Brexit and build a truly Global Britain.”