JEREMY CORBYN accused Theresa May yesterday of preparing to launch a “trade war” with the European Union if she does not get her way in Brexit talks.

The Labour leader said the Prime Minister was pursuing an “extremely risky” strategy amid mounting speculation that she will announce that Britain will leave the single market.

And he sharply criticised a warning by Chancellor Philip Hammond that the government could retaliate by slashing corporation tax if British firms faced new tariff barriers outside the EU.

When asked by German newspaper Welt am Sonntag whether Britain’s future will be as the “tax haven of Europe,” Mr Hammond said the country would “do whatever we have to do” to regain economic competitiveness.

“It seems to me a recipe for some kind of trade war with Europe in the future,” Mr Corbyn told the Andrew Marr Show.

“That doesn’t really seem to me a very sensible way forward.”

He said the Prime Minister’s negotiating strategy risked damaging British exporters.

“She appears to be heading us in the direction of a bargain-basement economy on the shores of Europe where we have low levels of corporate taxation. We will lose access to half our export market,” Mr Corbyn said.

“It seems to me an extremely risky strategy. There needs to be more discussion, more consultation and recognition that there is a close co-operation with Europe that is going to have to continue when we are outside the EU.”

The Labour leader’s intervention came as the Prime Minister prepared to set out her approach to the forthcoming Brexit negotiations in a major speech at London’s Lancaster House tomorrow.