The European Commission will cause significant and lasting economic harm to millions of families across the continent if it rejects Britain’s Brexit plan, Greg Clark, the business secretary, has said.

In a significant escalation of the government’s rhetoric Mr Clark used a meeting with his Austrian and Finnish counterparts to express dismay at what the government regards as EU intransigence to its proposals.

Jeremy Hunt, the foreign secretary, walked back on his suggestion last night that leaving the EU without a deal would be a mistake that both parties would “regret for generations”, saying instead that it would be a mis-step by Brussels.

He said on Twitter this morning: “Important not to misrepresent my words: Britain WOULD survive and prosper without a deal . . . but it would be a big mistake for Europe because of inevitable impact on long term partnership with UK. We will only sign up to deal that respects referendum result.”

His comments came come after reports that the commission was about to publish a presentation dismissing the government’s plans to remain in the EU single market for goods before they had been agreed by the cabinet. The presentation was made to EU ambassadors last month but publication was stopped after representations from London.