Theresa May has told her Cabinet ministers to hold their nerve as Brexit negotiations hit a difficult stage in the wake of the rejection of her plans by EU leaders at Salzburg.

As ministers gathered at 10 Downing Street, the Prime Minister said she remained confident of securing a withdrawal agreement with the EU, but the Government would continue to plan for the possibility of no deal.

The meeting came as the Department for Exiting the EU (Dexeu) released guidance for UK businesses and households preparing for a no-deal Brexit, which warned of possible disruption to flights and coach services to the continent.

Meanwhile, hardline Brexiteers piled pressure on Mrs May to ditch her Chequers blueprint for future relations with the EU.

Senior Tory Leavers including David Davis and Jacob Rees-Mogg attended the launch of a report by the Institute of Economic Affairs think tank calling on the Government to seek a “basic” free trade agreement for goods of the kind struck between the EU and Canada, while pursuing “regulatory freedom and trade independence”.

Mr Rees-Mogg, who leads the influential Tory backbench European Research Group (ERG), said the Plan A-plus report offered a “supercalifragilisticexpialidocious Canada” deal which the UK should seize.

“This is about how you can have a fantastic Brexit that sets us up for the next generation and ensures our prosperity,” he said.

“This has been offered to us by the (European) Commission, they have offered us the best trade deal they have ever done with any country ever in the world, so if you want to call it Canada plus, or super Canada or supercalifragilisticexpialidocious Canada, that is what is being aimed and its being offered.”

Former foreign secretary Boris Johnson – who did not attend the launch – also endorsed the report  as “a very good piece of work”.

Mr Davis, who quit as Brexit Secretary in protest at the plan agreed by Cabinet at Mrs May’s country retreat in July, said it was time to “reset” negotiations with Brussels.

“We’re currently, bluntly, in a cul-de-sac, I’m afraid Salzburg was all too predictable,” he said.

“Now what we need to do is to use the original commitments made back on March 7 by both (European Council president Donald) Tusk and (EU chief negotiator Michel) Barnier to go for an advanced free trade agreement.”

Jacob Rees-Mogg MP arrives at the launch of the Institute of Economic Affairs Brexit research paper
Jacob Rees-Mogg MP arrives at the launch of the Institute of Economic Affairs Brexit research paper (Victoria Jones/PA)

Mrs May’s spokesman ruled out moving towards a Canada-style deal, warning it would not prevent a hard border with the Republic of Ireland.

“The FTA would only apply to the Great Britain-EU relationship, with Northern Ireland effectively remaining in parts of the single market and customs union,” he said.

“The PM has repeatedly set out that we must protect the economic and constitutional integrity of the United Kingdom as a whole.”

At the Cabinet meeting in 10 Downing Street, Mrs May said it had always been clear that negotiations would at some point come to a critical stage.

And she told ministers: “Now is the time to hold our nerve.”

Mrs May said the Government’s White Paper remained the only plan on the table which achieves the goals of frictionless trade and an open border in Ireland.

She said she remained confident of securing a deal with the EU, but added that the Government would continue to “sensibly” plan for no deal.

Among guidance for no-deal planning included in the latest slew of Dexeu documents were warnings that:

– Passengers could face flight disruption if new permissions are not granted

– Bus and coach services to European Union countries could be suspended

– Chemical firms would need new registrations to continue exporting to EEA nations

– Pet owners could have to make preparations with their vets four months in advance of a trip to Europe

– Dozens of British traditional foods from Stilton cheese to Cornish clotted cream may be forced to apply for new protected status from the EU

Mrs May told the Cabinet that she was looking to the EU to match her promise last week that expat citizens’ rights will be protected in the case of a no-deal Brexit.

After talking with ministerial colleagues, she met with European Parliament Brexit co-ordinator Guy Verhofstadt for what the Belgian politician described as an “open and honest exchange” on the progress of negotiations.

Downing Street said the pair discussed the future economic partnership and the Northern Ireland backstop, with Mrs May stressing the need to ensure frictionless trade between the EU and the UK and maintain the constitutional integrity of the UK.

Both agreed that the best solution to the Northern Ireland border would be found through an agreement on the future relationship, said Number 10.