The writer Toby Young has apologised to Phillip Hammond after claiming the former chancellor's suggestion that Boris Johnson was backed by speculators who have bet billions on a no deal Brexit was antisemitic.

In a sign of growing ugliness around the language use in the heated debate around the UK's exit from the European Union, Mr Young retracted his statement after Mr Hammond threatened to sue for defamation.

Discussion around the alleged alliance between the Prime Minister and city speculators emerged again at this week's Conservative Party Conference in Manchester.

Mr Johnson's sister Rachel had told Radio 4's World At One show that there were "people who have invested billions in shorting the £… in the expectation of a No 'Deal Brexit".

Mr Hammond had suggested at the weekend that hedge fund chiefs and other speculators served to benefit from a no deal Brexit that "sends currency tumbling and inflation soaring".

But like Ms Johnson, the former chancellor had made no mention of religion or the ethnicity in his article for The Times.

On Twitter Mr Young accused Mr Hammond of propagating a “disgusting antisemitic controversy” that “Boris is being manipulated by a secret cabal of city financiers who stand to profit from economic ruin”. 

After threating to sue Mr Young, the journalist - who has worked alongside Mr Johnson in the past -  deleted the tweet shortly before midnight on Sunday, and issued an apology while maintaining that “speculators” is sometimes a euphemism for Jewish financiers.

The Financial Times quoted a senior No 10 official responding to Mr Hammond by saying “certain MPs are sounding like conspiracy theorists rather than former cabinet ministers with this kind of absurd and undignified mudslinging”.

Concerns were also raised about a Sunday newspaper story in which it was suggested that some of the MPs involved with the Benn Act, which compels the Government to postpone Brexit if a the EU and Britain cannot strike a new deal, were part of a "foreign collusion".

The story, allegedly briefed to the Mail on Sunday by Downing Street, took aim at MPs including Oliver Letwin, who had worked closely with Labour's Hilary Benn on drafting the bill.

But suggestions that the story was rooted in conspiracy theories and tropes around "unpatriotic" MPs was disputed, with claims the story actually referred to the alleged involvement of French government officials in the bill's drafting.