In a highly provocative speech at the Mansion House in the City of London on Thursday evening, the Chancellor will warn that the incoming prime minister is almost certain to face the same parliamentary deadlock over the departure from the EU as Theresa May.
He will predict her successor – almost certain to be the former foreign secretary – could be forced to trigger a second EU referendum or general election as the only way to break the deadlock.
“If the new Prime Minister cannot end the deadlock in Parliament, then he will have to explore other democratic mechanisms to break the impasse.
“Because if he fails, his job will be on the line – and so, too, will the jobs and prosperity of millions of our fellow citizens,” the Chancellor is expected to say.
His speech is likely to enrage Mr Johnson’s supporters – who accuse him of running a campaign in the Cabinet to sabotage Berxit – by raising the prospect of a hard-line pro-Brussels resistance faction within Tory ranks against the incoming Downing Street administration.
Mr Hammond, who is widely expected to vacate the Treasury when Mrs May leaves Downing Street, will warn all four remaining candidates for the Tory leadership that a “no-deal” Brexit could break up the UK.
“So I cannot imagine a Conservative and Unionist-led Government, actively pursuing a No Deal Brexit; willing to risk the Union and our economic prosperity, and a General Election that could put Jeremy Corbyn in Downing Street, to boot,” he will say.
“And I will not concede the very ground we stand on.
“I will fight, and fight again, to remake the case for pragmatism and, yes, for compromise in our politics – to ensure an outcome that protects the Union and the prosperity of the United Kingdom.”
His use of the phrase “fight and fight again” recalls a famous speech by former Labour leader Hugh Gaitskell attacking the anti-nuclear Left of his party in 1960.
Mr Hammond will tell the candidates for the Tory crown to face up to the continuing parliamentary deadlock over Brexit.
“There are some immutable truths that will continue to shape the Brexit debate over the coming months, no matter who is leader of the Tory Party,” he will say.
“Unless there is a general election, the parliamentary arithmetic will not change. Parliament will not allow ‘no deal’; and on the evidence so far, Parliament will not support the only deal that is on the table.”
Mr Hammond will also claim to have left cash for significant tax cuts and increased public spending for his successor but insist the money will be squandered in the event of a no-deal Brexit.
“We only have those choices if we avoid a damaging ‘no deal’ Brexit, which would cause short-term disruption to our economy, soaking-up all the fiscal headroom we have built, and more,” he will say.
He will say the next prime minister needs a “Plan B” if the Commons again rejects a withdrawal deal.
“The question to the candidates is not ‘What is your plan?’ but ‘What is your plan B?’
“If your plan A is undeliverable, not having a plan B is like not having a plan at all.
“So, the candidates need to be honest with the public. They need to recognise and address the difficult trade-offs inherent in delivering Brexit.”
He will add: “The candidates need realistic strategies for taking the UK economy out of the holding pattern in which it has been stuck for the last nine months and landing it safely on the runway marked ‘prosperity Brexit’ because we cannot allow ourselves to be forced to choose between our democracy and our prosperity.”