Some of Theresa May’s top aides have accused Mr Raab of “freelancing” during his discussions with the EU’s chief negotiator Michel Barnier.
The officials suspect the Brexit Secretary has been employing his own approach towards the negotiations and is veering away from Number 10’s strict agenda.
But sources close to Mr Raab maintained it was “utter rubbish” that Mr Raab is conspiring with Mr Barnier to achieve a customs border down the Irish Sea, or that he is adopting his own stance in the talks.
Two of the nine Conservative backbench MPs at the alcohol-filled dinner at Number 10 told The Sun the very senior official lambasted Mr Raab saying he “has been a f***ing nightmare ever since he arrived”.
One of the MPs said: “It was an utterly extraordinary thing for such a senior aide to the Prime Minister to say about a Cabinet Minister.
“We were stunned.
“The tension Number 10 is under trying to make the disastrous Chequers plan work is clearly getting to some of them.”
The senior official vehemently denied making the comment.
But he did confess to using sarcasm during the lavish meal that “could have been wilfully misunderstood”.
Meanwhile, a Downing Street spokesman said: “It is 100 percent nonsense and did not happen.”
Mr Raab took up the mantle of Brexit Secretary shortly after the resignation of David Davis.
Mr Davis walked away from Cabinet following the announcement of Mrs May’s notorious Chequers proposals, which have been largely rubbished by both the EU and the Commons.
It emerged on Thursday that UK negotiators have given Mr Barnier data on internal UK trade, on his request.
The figures comprise a detailed breakdown of the trade in goods that occurs between the UK and Northern Ireland.
Ireland’s Ambassador to the EU, Declan Kelleher, revealed Mr Barnier wanted the data to show his version of the backstop will not create an Irish Sea border.
Mr Kelleher argued the arrangement would cater for key technical controls at ports to build on existing systems.
He said: “The backstop in no way changes the constitutional status of Northern Ireland within the UK. It’s not a border down the Irish Sea.
“Essentially it would involve addressing issues such as technical controls at the ports between Northern Ireland and Great Britain which already exist.
“Nothing revolutionary is being proposed here, it’s simply a question of building on what’s already been achieved.”
An EU source told The Sun: “We can’t de-dramatise it by ourselves.
“We’re still open to the UK coming with something but as time goes by it looks less likely.”
Mr Raab and Mr Barnier held their weekly discussions over the phone on Thursday.
The Brexit Secretary said: “While there remain some substantive differences we need to resolve, it is clear our teams are closing in on workable solutions to the outstanding issues in the Withdrawal Agreement, and are having productive discussions in the right spirit on the future relationship”.
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