Jacob Rees-Mogg is leading a Tory backbench Brexiteer charge against Philip Hammond over his softening tone on quitting the EU.

The arch-Eurosceptic had demanded a fundamental shift in tone from ministers on Brexit, saying “close alignment” is unacceptable.

It came as the Chancellor delivered a speech at the World Economic Forum which appeared to take a softer approach – something No 10 was forced to clarify. 

Rees-Mogg, who as head of the European Research Group (ERG) has the backing of at least 60 MPs, accused negotiators of being “cowed by the EU” amid fears Theresa May was rowing back from her Lancaster House speech in which she said the UK would leave the single market and customs union.

Hammond, meanwhile, told power-holders in Davos, Switzerland, that he hoped the UK and EU will only move “very modestly” apart as he stressed they were already “completely interconnected and aligned”.

A Downing Street source later told reporters: “The Government’s policy is that we are leaving the single market and the customs union. 

“Whilst we want a deep and special economic partnership with the EU after we leave, these could not be described as very modest changes.”

I said in #Davos that gov wants to minimise any reduction in access to EU market post Brexit. And it’s a fact our economies are integrated, that’s the baseline from which we leave the single market and customs union – which clearly represents change.1/2

January 25, 2018
For anyone concerned – I was clear earlier in same speech at #Davos U.K. will cease to be member of EU on 29 March 2019, and after we will be outside Customs Union and the Single Market” 2/2

January 25, 2018
But it has angered hard Brexiteers as speculation mounts of a potential leadership challenge to the Prime Minister.

One former minister, Andrew Percy, hit out at the Chancellor, reportedly telling him to “put a sock in it”.

… As Rees Mogg lays into ministers who talk about tech in Davos but have no power to change the rules, Andrew Percy (former minister) tells Hammond to “put a sock in it” and stop “mocking other Cabinet ministers by writing his own Brexit policy” …

January 25, 2018
People “did not vote for the management of decline”, said Rees-Mogg, and ministers should not regard Brexit as a “damage limitation exercise”.

“They voted for hope and opportunity and politicians must now deliver it,” Rees-Mogg said.

Rees-Mogg said “really obvious opportunities” to improve people’s lives from Brexit were at risk, if a model similar to the EU’s single market and customs union is adopted.

This would leave the UK “divested of even the limited influence we current have”, he said.

UK negotiators, led by Brexit Secretary David Davis, must take a tougher stance, he said.

“For too long our negotiators seemed to have been cowed by the EU,” said Rees-Mogg.

“Their approach seems to be that we must accept what the EU will allow us to do and build from there. This is no way to negotiate and it is no way for this country to behave.”

Hammond, however, insisted the UK was not seeking an “off-the-shelf” model to replace its membership of the EU single market and customs union.

The starting point is a position of “high levels of bilateral trade in goods and services,” he said at the WEF.

“So instead of doing what we’re normally doing in the trade negotiations – taking two divergent economies with low levels of trade and trying to bring them closer together to enhance that trade – we are taking two completely interconnected and aligned economies with high levels of trade between them, and selectively, moving them, hopefully very modestly, apart.

“And so we should be confident of reaching something much more ambitious than any free trade agreement has ever achieved.”

Downing Street said May had used major speeches to talk about the “opportunities that Brexit will provide for the country”, and that the government was confident of securing these opportunities in the next phase of negotiations.

Asked whether she agreed with Hammond’s comments, the spokesman said: “The cabinet has signed up to the vision the PM has set out in her speeches.”