Brexit Secretary David Davis has undermined one of Theresa May’s most high-profile bargaining chips in upcoming exit talks with Brussels.

The Prime Minister has warned the European Union that she could walk away from Brexit negotiations because no deal would be 'better than a bad deal.

But Mr Davis admitted to MPs that the Conservative Government had yet to calculate whether or not that claim was true.

Worse, the estimates would not be ready for at least another year, he said.

The Liberal Democrats accused the Conservatives of "driving towards a cliff-edge with a blindfold on".

At the weekend the Foreign Secretary Boris Johnson said that crashing out of the EU without an exit agreement would be "perfectly OK".

But critics have accused May of making a pointless threat, that would primarily punish the UK.

Asked about exiting the EU without a deal, Mr Davis said: "I can't quantify it for you yet. I may well be able to do so in a year's time. It's not as frightening as some people think, but it's not as simple as some people think."

He said that Mrs May's "no deal is better than a bad deal" warning came about "because in the emotional aftermath of the referendum, there were lots of threats of punishment deals and all the rest of it.

"We had to be clear that we could actually manage this in such a way as to be better than a bad deal, and that is true.

He also conceded that no deal would be not “as good an outcome as a free trade, friction-free, open agreement, which is why we are trying for that."

He told MPs on the Commons Brexit Committee that leaving the EU under World Trade Organisation rules would mean tariffs of between 30 and 40 per cent on agricultural exports and 10 per cent on cars.

Britons would also lose access to the EHIC health insurance cards.

European Council president Donald Tusk has said Europe will not be "intimidated" by British threats to walk away from talks.

Mr Tusk was very clear as he told MEPs: "A 'no-deal scenario' would be bad for everyone, but above all for the UK."

Lib Dem MP Alistair Carmichael, who sits on the Brexit Committee, said: "How can Theresa May claim that no deal is better than a bad deal, when her government hasn’t even assessed what damage a chaotic hard Brexit would do?

“It is the equivalent of driving towards a cliff-edge with a blindfold on.

“It is appalling that this Government is days away from triggering Article 50, yet still hasn’t properly thought through the consequences of its reckless approach.”

Labour committee member Pat McFadden told the Brexit Secretary: "Without an assessment, you have mortgaged the country's economic future to a soundbite."

Speaking outside the hearing, shadow Brexit secretary Sir Keir Starmer said: "The Government is recklessly talking up the idea of crashing out of the EU with no deal. They have repeated the mantra that 'no deal is better than a bad deal'.

"But we now know they have made no assessment of the economic impact of the Prime Minister failing to secure a deal."

Mr Davis also acknowledged that differences still remain with the Scottish Government.

"We haven't got to a position where we are in an identical position, but we are very close on a lot of issues, but not all," he told SNP committee member Joanna Cherry.

First Minister Nicola Sturgeon has accused the UK Government of intransigence over her demands.

Theresa May's official spokesman said: "David Davis was asked a specific question about a new overall economic assessment. It was also made clear that there is rigorous work going on across Government about the implications.

"The Prime Minister's view remains that a bad deal would be worse than no deal."

Meanwhile, No 10 slapped down Trade Secretary Liam Fox after he admitted that there was an “ongoing argument” within government about whether or not to include students in immigration figures.

A spokesman said: “The prime minister has been clear over a long period of time that students should continue to be included in the official immigration statistics.”