Guy Hands, the founder and chairman of private equity firm Terra Firma, said that "the Brexit that was done is completely hopeless and will only drive Britain into a disastrous economic state".

He further warned that the UK economy could be moving towards the need for a bailout from the International Monetary Fund (IMF).

The IMF made an exceptional intervention in UK politics in the wake of Liz Truss and Kwasi Kwarteng’s disastrous “mini-Budget”, calling on the government to change course.

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Speaking on BBC Radio 4’s Today programme, Hands warned the Tories could be leading the country towards the need for an even more dramatic IMF intervention.

He said the UK faced “steadily increasing taxes, steadily reducing benefits and social services, higher interest rates, and eventually the need for a bailout from the IMF like we were in the 70s”.

He went on: “I think the reality is, if you’re a businessman, you have to speak positively. I’d say 70% of my investments are in the UK and I have to try and be positive about it from a business perspective.

“But, from an honesty perspective and in terms of what I actually see out there, the increasing levels of poverty in the UK, and it’s a poverty which is moving up the economic level …

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"It’s not just the 17% of children who are now suffering from malnutrition in the UK, it is now middle-class people who will not be able to pay their mortgages when they are reset who are finding it difficult to make ends meet, and it will just move across the whole of society.”

He said that the Conservatives need to “own up” to the mistakes made over Brexit and renegotiate with the European Union.

Hands told the BBC: “The reality is, when they did Brexit, they had a dream, and the dream was a low-tax, low-benefit economy.

“Truss, to be fair to her, tried it. It clearly isn’t something that’s acceptable to British people – the British people have never voted, or even shown any inclination to vote, for the sort of extreme Thatcherism that Brexit needed.

“Once you accept that you can’t actually do that, then the Brexit that was done is completely hopeless and will only drive Britain into a disastrous economic state.

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“So, I think, if the Tory Party can own up to the mistakes they made in how they negotiated Brexit and have somebody leading it who actually has the intellectual capability and the authority to renegotiate Brexit, there is a possibility of turning around the economy, but without that the economy is, frankly, doomed.”

Asked if he believed the Tory Party was fit to lead, Hands said: “No, to be quite blunt.”

He went on: “I think it’s got to move on from fighting its own internal wars and actually focus on what needs to be done in the economy and admitting some of the mistakes they’ve made in the last six years, which have, frankly, put this country on a path to be the sick man of Europe.”

It comes as Labour leader Keir Starmer (above) continued to double-down on his support for the hard Brexit negotiated by Boris Johnson’s government.

Asked if the UK could rejoin the EU under Labour, Starmer said: “It’s a straight no from me.”

During an LBC phone-in, he went on: “It’s a straight no from me, we’re not going back into the EU. That isn’t a position of my party, that isn’t what an incoming Labour government would do.

“We do think that we should make Brexit work. I think all that’s happened so far is we’ve got Brexit done in the sense that we’re out of the EU. I think we’ve got to make it work now.”