Boris Johnson and Jeremy Hunt have been warned by the Chancellor that there will be no extra cash to meet their spending pledges in the event of a no-deal Brexit.
Philip Hammond told the Tory leadership contenders that the “fiscal firepower” that has been stocked up will be needed entirely to counteract the effects of departing without a deal.
Both candidates have made costly pledges as they vie to replace Theresa May as prime minister.
Writing on Twitter on Monday, Mr Hammond said: “The ‘fiscal firepower’ we have built up in case of a no-deal Brexit will only be available for extra spending if we leave with an orderly transition.
“If not, it will all be needed to plug the hole a no-deal Brexit will make in the public finances.”
Foreign Secretary Mr Hunt and frontrunner Mr Johnson both say they are prepared to take the UK out of the EU without a deal.
Mr Johnson has taken a more hardline approach, saying the exit must happen by the Halloween deadline “do or die”, but Mr Hunt said he would ask for a delay if a deal was in sight.
Mr Hammond’s warning comes after Mr Hunt prepared to announce a £6 billion war chest to handle a no-deal Brexit.
Mr Hunt has also pledged cuts to corporation tax at an estimated cost of £13 billion per year in the short term and an increase in defence spending to cost an additional £15 billion in four years.
Mr Johnson has signalled he would be prepared to increase borrowing to fund infrastructure projects.
He has also pledged to give a tax cut to earners on more than £50,000, a move which was criticised as benefiting the top 10% of earners and costing a suggested £9 billion.
Fund our Investigations Unit
You can help us investigate corruption, expose injustice and uncover the truth.
As one of the only independent investigations units in the country, we work for you – but we need your help to keep going. We need to raise £10,000 to continue our groundbreaking investigations. Can you chip in?