Brexit has morphed into an “intense political crisis” with “denialism” from ultra Remainers and Leavers pushing the country toward economic peril, the UK’s former ambassador to the EU has said.

Sir Ivan Rogers warned extending Article 50 “isn’t a given and isn’t a UK decision”, and the risk of crashing the negotiations was “higher than either the markets or the commentariat believe”. 

Pro-Brexit campaigners now pushing no-deal had a “can’t be arsed to think” approach, he said, and were guilty of “a gross dereliction of responsibility and a huge failure of leadership”.

Soft Brexit centrists and second referendum advocates believe their solutions “superior” while Theresa May miscalculated her deal would unite MPs against “the abyss”, he said. But no side fears the threat of no-deal and all have “dug in”, the ex-diplomat said.

Speaking in central London on Tuesday night, Rogers said “a political class determined not to look reality in the eye” needs to “wake up”.

“They will only further damage their reputation in the eyes of the public further if they fail to,” he said. “And we have little unity, rather less than we had 30 months ago, with growing risks to social and national cohesion coinciding with a growing risk that the UK in the next decade will break up.” 

Rogers, who resigned as May entered Brexit negotiations, blaming “muddled thinking”, was speaking as MPs compete to wrest control of the process, with soft Brexit proponents, People’s Vote advocates and hardline leavers tabling amendments after the prime minister’s deal was crushed in parliament. 

But Rogers said the “cold, hard reality” he had experienced was that Brussels viewed Brexit on “technocratic” terms and the UK “can’t have everything you want all of the time”. 

Time, he believes, could also be running out as EU leaders see extending Article 50 as sanctioning more of “the same old self-absorbed British debate”.

He said: “We desperately need clear, honest thinking about our choices not just in the weeks and months ahead but in the years and decades ahead.” 

Attempts to broker a “quick and dirty” trade deal before the next general election, due in 2022, could also be doomed, he said, because the EU would ruthlessly run down the clock – and the UK has not yet had “a grown up debate” about EU self-interest in the process.

“I’m able to throw a bucket of cold water on those who sleep on and on in the hope that finally they wake up and realise where they are and that the fire could consume them – but that’s all I can do,” he said. 

He added: “No-one on the other side of the Channel is going to sign off now on what the UK urgently wants until they have banked all the things that the UK doesn’t want. 

“I’m sorry if that sounds rough but others have political interests too and it is time we had a grown up debate about others having an interest in politics too. 

“If we end up seeking, as we might, for political reasons, a quick and dirty trade deal, to be done at all costs before the next general election, unless that general election is in the next few weeks and we want to escape the vassaldom of transition, the EU will use the pressure of the ticking clock in the next phase just as effectively as they have in this phase to extract concessions.” 

He reserved his harshest criticism for hardline Brexiteers who refused to consider any option but no-deal, despite trumpeting the merits of a soft Brexit pre-referendum.

Dominic Cummings, the leader of Vote Leave, “studiously” avoided setting out a precise Brexit deal but his acolytes in Westminster were now guilty of failing to show leadership by not picking a direction beyond falling on to World Trade Organisation rules, he said. 

“This is the ‘I have no solutions and can’t be arsed to think’ option,” he said. “In all honesty, it is a gross dereliction of responsibility and a huge failure of leadership under cover of increasingly demagogic rhetoric about betrayal.” 

And in an open attack on Boris Johnson, Rogers hit out at the former foreign secretary’s claim the UK would have “ample, balanced and pragmatic mini-deals” with EU countries “in a jiffy” once May’s deal was rejected. 

“He knows full well it isn’t true, it is just a pale repetition of the same old, tired rhetorical tropes we heard from him in office in 2016, 2017 and 2018.” 

He added: “No-deal really has become the latest canvass for Brexiteer dreams – none of this really has to be true, it just has to sound compelling and reassuring to people.

“The EU common position, which will be very easy to strike, post-collapse of the withdrawal agreement will not be them begging us for the immediate start of free trade agreement talks.”

But while much of his speech supported a middle ground compromise, Rogers was scathing about May’s decision not to seek a single market deal, when services make up around 80% of the UK economy. 

He said politicians’ “dismal” debate focusing almost exclusively on the customs union was a dangerous path. 

“In Westminster, we are deep in Alice In Wonderland […] where the bulk of our peculiarly antiquated debate about our trading future has focused on goods and tariffs,” he said.

He added: “It cannot be repeated enough […] because we are about to find out the hard way in trade negotiations, that leaving the single market makes trade, notably in services, in which we are world class, less free […] because we are closing off ways in which our world class firms can provide services seamlessly across borders.”