Britain could lose up to 9.5 per cent of its gross domestic product within 15 years if it leaves the European Union's single market in a "hard" Brexit, The Times quoted a leaked government report as saying.
The forecasts, which say the treasury could lose up to STG66 billion ($A107 billion) annually, are contained in a draft cabinet committee paper and are thought to be based on a controversial treasury report published in April, which critics had dismissed as scaremongering by the treasury, the newspaper said.
"This is Brexit reality, and precisely why parliament must be involved in achieving the best deal for the UK," Conservative MP Anna Soubry wrote on Twitter alongside an image of The Times' front page story.
Soubry is among dozens of MPs, including other Conservatives, lobbying for parliament to be given a vote on the government's strategy for negotiating Brexit. Parliament is expected to debate the issue on Wednesday.
"The horrific damage of a hard Brexit is clear," Soubry said in a separate statement via Open Britain, a cross-party group campaigning for Britain to stay in the single market.
"Less tax revenue means less to invest in schools and hospitals, lower trade and investment means businesses and jobs at risk," she said.
News of the pessimistic forecasts came as the pound slumped to below $US1.23 on Tuesday after Prime Minister Theresa May and Brexit minister David Davis appeared to suggest that they could seek a Brexit outside the EU single market to allow Britain to control migration from the bloc.
The Times quoted the leaked cabinet document as saying trade volume and foreign direct investment could both fall by around 20 per cent after a "hard" Brexit.
John McDonnell, the opposition Labour party's shadow chancellor, said losing access to the single market "would be devastating for jobs and livelihoods."
"The Tories (Conservatives) need to stop playing political games," McDonnell said in a statement reacting to The Times' report.
"The British people voted to leave the European Union and all sides must respect that decision, but what they certainly didn't vote for was economic misery and loss of jobs," he said.
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