UP to 8,000 new staff are to be employed by the UK Government to prepare for Brexit, No 10 has confirmed, with the taxpayers’ bill already reaching £1 billion and expected to rise much higher.

David Davis, the Brexit Secretary, who announced talks would resume in Brussels next week, told he Lords EU Committee that the “withdrawal agreement, on balance, will probably favour the [European] Union in terms of things like money and so on” whereas the future relationship would favour both sides.

Sterling rose against the euro after Michael Barnier, the EU’s chief negotiator, spoke of “accelerating” the process. The UK Government is hoping to secure agreement on phase one of the negotiations - the divorce bill, citizens’ rights and Northern Ireland - by December to unlock the second phase on trade.

Some 3,000 staff have already been taken on in Whitehall to prepare for Brexit, including 300 lawyers.

Downing Street revealed that between another 3,000 and 5,000 staff would be needed by HM Revenue and Customs to manage Britain’s borders. Earlier this month, a senior Whitehall official warned that as an “absolute last resort” the Army might have to be brought in.

Lord Ricketts, the former most senior official at the Foreign Office, pointed out to the Commons Foreign Affairs Committee, that Britain would also need to hire more diplomats to influence EU decision-making after Brexit.

Mr Davis led a Cabinet discussion on Brexit preparation, telling colleagues about a “significant acceleration” in the withdrawal process to deal with all possible outcomes, including a no-deal scenario, and that 300 programmes were underway across Government.

Some £662 million has already been committed for Brexit preparations over the course of this Parliament, with more than £250m additional funding in 2017/18 and a further £412m for the period up to 2022.

The extra money will be spent on implementing changes at the border, preparing for future new trade agreements and converting existing EU law into domestic law on withdrawal.

Theresa May also told Cabinet that a new Brexit trade sub-committee was being created "to support the intensification of our domestic preparations".

Chaired by First Secretary of State Damian Green, the committee will "focus on domestic preparedness, legislation and devolution".

Later this month, the Prime Minister will hold a Brexit showdown with Nicola Sturgeon, who has raised serious concerns about linking the transition period directly to securing a trade deal.

No 10 spoke about an intensification of the liaison with the Scottish Government; Damian Green, Mrs May’s deputy, is due to hold another Brexit bilateral with John Swinney, Ms Sturgeon’s. A further meeting of the intergovernmental Joint Ministerial Committee is expected before Christmas.

David Mundell, the Scottish Secretary, has raised concerns at Cabinet level about the need to get Holyrood’s consent to the UK Government’s EU Withdrawal Bill, which the FM regards as a “power-grab”. Government insiders fear not getting MSPs’ backing on a number of Brexit bills could “clog up” the legislative programme.

The Cabinet Brexit discussions came amid reports the Bank of England has warned quitting could cost up to 75,000 financial services jobs.

Senior figures at the Bank said estimates over job losses were a "reasonable scenario", particularly if the UK leaves without special arrangements for the sector.

Sir Vince Cable, the Liberal Democrat leader, said: "The analysis by the Bank of England shows what is at stake should the Government be foolish enough to take us on a course that crashes us out of the European Union.”

Also appearing before the Lords EU Committee, Labour’s Lord Darling warned that the Brexit trade deal with the EU could take up to five years to negotiate and there was a 50 per cent chance of a "car crash" in the talks with Brussels along the way.

The former Chancellor said Mrs May needed to set out what her aim was for the negotiations claiming that at the moment the UK was "walking through a snowstorm" and could end up falling over a cliff.