THERESA May does not want to sack Philip Hammond in her New Year reshuffle as she fears she is too weak.
Friends of the PM claim she may not be able to withstand revenge that the Chancellor will wreak on her.
Mrs May is refusing to move or fire her long-standing former political ally in a January overhaul of her top table, despite a series of bitter clashes with him this year and in the Budget’s run up.
A close ally said: “There’s no doubt Hammond would do ‘a Geoffrey Howe’ on her from the backbenches.
“He wouldn’t hold back, and that would be fatal with the state the party is in.”
Margaret Thatcher’s longest serving Cabinet minister and former close ally, Lord Howe, resigned in November 1990 over a row about Europe.
His extraordinary attack on her in a packed House of Commons chamber sparked a Tory leadership contest and Lady T’s own resignation three weeks later.
Only a major Budget disaster today would force Mrs May to fire Mr Hammond, it is now thought.
Allies also say Mrs May has ruled out making Environment Secretary Michael Gove her next Chancellor,a move it is claimed he has been pitching hard for by using long “economicky” words during Cabinet meetings.
Promoting Mr Gove would be too divisive and upset the Cabinet’s Brexit balance, the PM believes.