EU threatens sanctions to stop Britain undercutting economy

The latest row blew up when Mr Baker was asked by Jacob Rees-Mogg to confirm that Charles Grant, head of the Centre for European Reform, had told him that “officials in the Treasury have deliberately developed a model to show that all options other than staying in the customs union are bad, and that officials intend to use the model to influence policy”.

Mr Baker, a minister in the Department for Exiting the European Union (Dexeu), replied that Mr Rees-Mogg was “essentially correct”, adding: “At the time I considered it implausible because my direct experience is that civil servants are extraordinarily careful to uphold the impartiality of the civil service. It would be quite extraordinary if it turned out that such a thing had happened.” When challenged by opposition MPs, Mr Baker said: “I didn’t say it was correct. I said the account that was put to me is correct. It was put to me, I considered it an extraordinary allegation, I still consider it an extraordinary allegation.”

...Mr Grant denied he had made the claim at a private function during the Conservative Party conference last October. He was supported by Antoinette Sandbach, the Tory MP for Eddisbury, who was also present.

Mrs May’s spokesman, however, claimed Downing Street had “no reason to question [Mr Baker’s] account” and said he would not be disciplined. Even after an audio recording of the function emerged that backed up Mr Grant’s denials, neither No 10 nor Dexeu changed position.

Eventually Mr Baker backed down and tweeted: “This morning in parliament, I answered a question based on my honest recollection of a conversation . . . The audio of that conversation is now available and I am glad the record stands corrected.

“I will apologise to Charles Grant, who is an honest and trustworthy man. I will clarify my remarks to the House.”