The Government could potentially unilaterally override parts of the post-Brexit Northern Ireland Protocol but ministers have insisted this would not necessarily lead to a trade war with the EU.
However, Sir Ivan Rogers told BBC Radio 4’s The World This Weekend programme: “I think there’s a severe risk that we are heading into a trade war.
“And obviously, it’s a time like this with the worst conflict on European soil since the Second World War and the real risk of recession in both the eurozone and the UK, I would have thought in the second half of the year and into next year, this may feel like madness, but I think there is a severe risk of it happening.”
Sir Ivan added: "They [the EU] have heard the message obviously direct from Liz Truss and from the Prime Minister, I think, about the likelihood that the UK will put legislation on the table.
“I think if we go down that route, and that legislation, incidentally, I don’t think would have to come into force for the EU to think that it was entitled to retaliate.”
Watch: Labour attacks govt’s threat of a ‘trade war’ with the EU
The former senior diplomat added that he expected that EU officials would “look for some things that would do some economic damage, but would concentrate the minds of those senior ministers,” in the event of a trade war.
The Government has suggested that the Protocol needs to be amended because it requires checks on British goods entering Northern Ireland, but months of negotiations with Brussels have failed to yield a breakthrough.
Boris Johnson is expected to visit Belfast on Monday to urge the resumption of power sharing, where DUP politicians who oppose the Protocol have blocked the election of a new Speaker in the assembly.
Speaking on the BBC’s Sunday Morning programme, Business Secretary, Kwasi Kwarteng, said a trade war over the Protocol would be “completely self defeating”.
Mr Kwarteng also urged the EU not to react in a “disproportionate” way if Britain were to override parts of the agreement.
He said: “I don’t think there is going to be a trade war. There has been a lot of talk, a lot of threats about what the EU will or won’t do. That’s up to them.”
He added: “I think this talk of a trade war is irresponsible and I think it is completely getting ahead of ourselves.”