The government has rejected demands for an inquiry into claims a no-deal Brexit would benefit currency speculators who bankroll the Conservative Party.

Shadow chancellor John McDonnell told MPs supporters of Prime Minister Boris Johnson could benefit from a disorderly EU exit by betting against the pound.

He has written to the UK’s top civil servant to express concern.

Treasury minister Simon Clarke dismissed it as a conspiracy theory “fit for the tin foil hat brigade”.

Asking an urgent question in the Commons, Mr McDonnell warned about currency speculators “gambling on the country’s failure” should a no-deal Brexit take place.

“The prime minister and the Conservative Party have received £726,000 from individuals who back a no-deal Brexit, many involved in hedge funds, in this year alone,” he told MPs.

He said there was a danger that the PM’s “promotion of a no-deal scare” would result in “profiteering by his friends and donors” – something that could be seen as a conflict of interest.

The shadow chancellor has written to Cabinet Secretary Mark Sedwill about the issue.

In his Commons reply to Mr McDonnell, Mr Clarke quoted a Financial Times article, which had said “this is yet another a tin-foil-hat conspiracy theory”.

The minister said the government would not comment on individuals, adding: “We do not accept there is any prospect of a conflict of interest.”

Labour MP Mike Amesbury asked if Mr Clarke believes former chancellor Philip Hammond is part of the “tin-foil-hat brigade” given that he has raised concerns over the issue.

Mr Clarke noted his admiration for Mr Hammond before saying: “In this case he is wrong.”

Lib Dem former minister Sir Ed Davey asked if there would be an independent investigation into currency speculation and Brexit. Mr Clarke replied: “No.”