It follows media reports that Theresa May is preparing to cave in to Labour’s demands for a customs union with the EU to end a deadlock in their cross-party talks.
He said his party wants to get a deal done ‘as soon as possible’ but needed guarantees that an agreement wouldn’t be ‘ripped up’ by a future Conservative leader.
When asked on BBC One’s Andrew Marr show if he trusted Mrs May, he replied: ‘No, sorry, not after this weekend when she’s blown the confidentiality I had and I actually think she’s jeopardised the negotiations for her own personal protection.’
McDonnell accused the PM of acting in ‘bad faith’ after the Sunday Times reported the Prime Minister would put forward plans for a customs arrangement that would last until the next general election.
He added: ‘We are negotiating with Theresa May’s team as requested. While we’re doing that – and we think we’re gaining an understanding of our different positions and where we can reach some compromise – in the wings, if you like, are all the leadership candidates virtually threatening to tear up whatever deal that we do.
‘So we’re dealing with a very unstable Government and let me just use this analogy: it’s trying to enter into a contract with a company that’s going into administration and the people who are going to take over are not willing to fulfil that contract. We can’t negotiate like that.’
He hinted at the possibility of a second EU referendum being held to decide on any future trade deal.
He said: ‘I think the Conservatives have to recognise that if a deal is going to go through there might be a large number of MPs who will want a public vote.’
Shadow health secretary Jon Ashworth said it was ‘disappointing’ that it appeared Tory ministers and spin doctors had been ‘briefing about what’s happening’ in the talks.
Speaking on Sky News’ Sophy Ridge On Sunday he said: ‘We’ve entered these negotiations in good faith – they should be confidential at this stage because if you want to get an agreement you have to be able to respect the position of those sat around the table and we seem to be reading all kinds of things in the newspapers today.
‘I would say to those Tories negotiating this isn’t really the best way to go about it to be frank.’
It comes after Theresa May called on Labour to agree a Brexit deal after both parties took a hit in the local elections this week.
In an article for the Mail on Sunday, the Prime Minister asked Jeremy Corbyn to ‘put their differences aside’ to get a deal as a matter of ‘urgency’.