The Prime Minister may have secured a last-minute Government Withdrawal Bill victory last night, but she faces a fresh showdown with anti-EU Tories who fear further compromises with the EU will come at price for Brexit Britain.
A focus on securing a free market for goods with the bloc is likely to be at the cost of UK concessions on freedom of movement.
Whitehall sources say free movement of goods is now “100 percent the direction of travel” for Brexit negotiations.
A row is brewing as Government insiders predict the UK will opt to retain a relatively frictionless trading relationship with the EU if it agrees to stick to single market rules on manufactured goods but diverges elsewhere, such as services.
However, EU chiefs are unlikely to accept this deal if Brexit Britain fails to back down on freedom of movement.
A cabinet source told The Guardian: “If you look at how all the negotiations with Brussels have been structured it looks like the whole process has been geared towards this endgame.
“But the big kicker for Brexiters will be freedom of movement.
“What No 10 is banking on is that the EU will let them fudge this and give them some sort of flexibility. They’ll come up with clever wording but it will basically be freedom of movement by another name.
“There’s no way Brussels is going to allow us an opt-out.”
Tory Brexiteers fear Brussels bosses are looking to offer Britain access to its market goods this autumn in a bid to force Mrs May to concede on freedom of movement – a Brexit red line.
Last night, MPs voted by 319 to 303 to reject a House of Lords amendment to the EU Withdrawal Bill that would have ensured the Commons would have the chance to block a “no deal” Brexit.
In dramatic scenes at Westminster, MPs were told shortly before the key vote an official ministerial statement will be issued on Thursday making clear it is ultimately for Speaker John Bercow to decide whether they get a “meaningful vote” on a no-deal withdrawal from the EU.
The concession was accepted by leading pro-EU Tory Dominic Grieve, who was greeted with jeers of “shame” from the opposition benches when he declared he would back the Government.