Liam Fox has admitted that a failure to secure a Brexit deal would damage the UK economy.
The International Trade Secretary said Britain and Europe would suffer if Theresa May came back from the talks empty handed.
The Prime Minister has warned she is prepared to walk away from the negotiations rather than take a “bad deal.”
MPs have warned that a failure to strike a deal would be disastrous at it would mean falling back on World Trade Organisation rules. These would see the UK paying tariffs on 90% of exports to the EU, including 10% on cars and 15% on food.
Questioned about what would happen, Mr Fox told Sky News’ Ridge on Sunday: “Your substantive point about not having a deal of course would be bad. But it’s not just bad for the UK, it’s bad for Europe as a whole.”
Mr Fox also admitted there would be a “price” for leaving the single market.
He said: “We accept that we are not staying in the single market and there is a price to be paid for not staying in the single market. It’s a political decision.”
His comments came as David Davis urged Remainers not to “tie the PM’s hands” as MPs prepare for a final Brexit showdown.
The House of Commons will seek tomorrow afternoon to overturn two Lords amendments to the Article 50 Bill.
Ministers are braced for a rebellion by a handful of Tory MPs but expect the legislation to pass through Parliament.
The stage will then be clear for Theresa May to announce formally that Britain is leaving the European Union – kicking off the two years of negotiations.
Mrs May, who is giving a statement to Parliament on Tuesday on last week’s EU summit, could trigger Article 50 as early as this week.
Downing Street is confident the Bill will get the support of the majority of MPs and the Lords will not thwart the Commons a second time.
The Lords’ amendments called on the Government to guarantee the rights of EU citizens living in the UK and to give Parliament a meaningful vote if the Prime Minister fails to reach a deal with the EU.
Mr Davis said he was drawing up contingency plans if the negotiations “go wrong” to stop the country going off “a cliff edge”.
“The aim is to get a good outcome and I’m confident I’ll get a good outcome.
“One of the reasons we don’t talk about the contingency plan too much is we don’t want people to think this is what we are trying to do,” he told the BBC’s Andrew Marr show.
The Brexit Secretary said it was “inconceivable” that Parliament would not get a vote on the final deal.
“We are going to do that. Please don’t tie the Prime Minister’s hands in the process of doing that for things which we expect to attain anyway,” he said.
Emeli Sande’s incredibly appropriate song for David Davis
But Cabinet ministers gave mixed messages about the implications of not getting a deal.
Foreign Secretary Boris Johnson said it would not be a disaster for the UK to fall back on WTO rules.
Asked if the Government was drawing up contingency plans in case there is no deal, Mr Johnson replied: “I think that actually, as it happens, we would be perfectly okay if we weren’t able to get an agreement.
“I don’t think that the consequences of no deal are by any means as apocalyptic as some people like to pretend.”
Tory veteran Lord Heseltine said Mr Johnson’s analysis was “rubbish.”
Tory Remain MP Anna Soubry claimed some Brexiteers were “deliberately” willing the talks to fail so Britain would have to use WTO rules.
“I think the big fear, certainly the fear I have, is that we will be crashing out in six months.
“My fear is what this is really about is us deliberately, not the Prime Minister, but others deliberately ensuring that we have no deal and no deal pretty soon,” she told the BBC’s Sunday Politics.
Shadow Brexit Secretary Keir Starmer said: “This morning Boris Johnson said that it would be ‘perfectly okay’ if the Prime Minister were to fail in her negotiations and Britain were to leave the European Union without a deal.
Lord Heseltine says Boris Johnson is talking “rubbish”
“David Davis said Britain would leave the European Union without a deal if the Prime Minister fails to secure a deal that Parliament is willing to approve.
“These comments come on the same day that the Foreign Affairs Select Committee described leaving the EU without a deal as ‘destructive’ and stated that it would lead to ‘economic losses’ and a diminishment of our international reputation.
“Britain faces a stark choice between two very different futures. There is the collaborative and co-operative future relationship with the EU proposed by Labour, where we would retain our economic ties and continue to work together with our European partners to solve common problems.
“By contrast senior figures in the Cabinet are talking up a dire future where Britain completely breaks off from our primary allies and trading partners.”