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Ministers have been forced to postpone next week’s debate on the EU withdrawal bill on a chaotic day that saw Michel Barnier warn of a “disturbing deadlock” in the divorce talks in Brussels and a growing whispering campaign against the chancellor in Westminster.

Andrea Leadsom, the leader of the House of Commons, told MPs the key piece of Brexit legislation would not be debated next week, as they had planned, as the government struggles to respond to a deluge of hostile amendments.

Labour said it had identified more than a dozen of the 300 amendments that already have the backing of seven or more Tory MPs, theoretically enough to defeat the government.

The growing scale of the parliamentary discontent underlines the challenge facing Theresa May, on a day in which the UK’s divorce talks were overshadowed by a series of developments:

  • Sterling fell sharply against the euro on the currency markets on Thursday lunchtime when Barnier, the EU’s chief negotiator, gave a sombre assessment of the status quo.
  • Philip Hammond came under fresh attack from pro-Brexit Conservatives for what some regard as his pessimistic outlook, with former chancellor Lord Lawson calling on him to be reshuffled out of his job.
  • Christine Lagarde, the International Monetary Fund’s managing director, said negotiators on both sides had to put the interests of people before those of business because the risks of not reaching a deal were unimaginable.

Labour seized on the disunity in Tory ranks and market uncertainty to say that May would struggle to pass her flagship EU withdrawal bill without making a series of concessions.

“The Tories’ repeal bill is simply not fit for purpose,” said the shadow Brexit secretary, Keir Starmer. “It would give huge and unaccountable power to ministers and puts vital rights and protections at risk. Theresa May must start listening to the legitimate concerns of Labour and some of her own MPs and urgently change approach.”

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