Brexit Secretary David Davis: No exit deal is a 'distant possibility'

Leaving the European Union with no deal is a "very distant possibility", the Brexit Secretary has said.

David Davis stressed a "no-deal" Brexit was improbable after prominent leavers signed a letter organised by the Leave Means Leave campaign urging Theresa May to tell the EU she will walk away from negotiations if they continue to refuse to discuss trade.

Former cabinet minister Owen Paterson said Britain should not be "terrified" of leaving with no deal and trading on World Trade Organisation terms.

But Mr Davis distanced himself from the idea, although he said the Government was preparing for no deal as an "insurance policy".

In an interview with European newspapers, he said: "The first thing to say is that it is a) not our intention, b) I don't think it is a probability, I think it is a very distant possibility.

"That being said, we have to prepare for it. I mean, a responsible government prepares for all outcomes, and we are doing that.

"It is no part of our negotiating strategy, and no plan of our planning for the future in terms of what we intend, it is just a security thing, like anything else you do on security, you produce your own insurance policy."

Earlier, Mr Paterson dismissed suggestions that leaving with no deal would result in customs delays or increased prices.

The Tory Brexiteer said it appeared unlikely that a trade deal would be struck with the EU "because they are flatly refusing to talk about it". Instead there was a "complete obsession with money" - the so-called Brexit divorce bill.

It was "inevitable at the moment, it is an ineluctable certainty we are going to end up with WTO at the end of this anyway" so it was better to "state that now" and give business time to prepare.

He told BBC Radio 4's Today programme that a trade deal with the EU is "the best destination, but what we should not be terrified of is the WTO".

Mr Paterson said the UK could unilaterally decide not to impose tariffs if trade moved to WTO terms in an effort to protect consumers: "We could decide that, that would be up to our own elected politicians to make that decision."

He rejected concerns that the lack of a trade deal could lead to queues at ports, claiming that only 2% of shipments were checked by customs, with nearly all trade done electronically.

As European leaders gathered in Brussels, he said: "We have to face the fact that this summit is not going to discuss any future trade deal. We are ineluctably moving down the road to a WTO arrangement so we had better start preparing for it.

"If they come back - and we very much hope they would - to talk about a free trade deal, that would be a bonus."

But pro-EU Tory former cabinet minister Nicky Morgan said: "It is absolutely not 'inevitable' that the UK ends up on WTO terms with no Brexit deal - it is what the hard Brexiteers want."