Thursday

21st Sep 2017

UK finance minister wants transitional Brexit deal

  • Hammond argues for "soft Brexit" to protect business (Photo: council of European Union)

British finance minister Philip Hammond came out in support of a transitional Brexit deal on Monday (13 December), arguing that disruption would hurt British business and could risk the country’s “financial stability”.

He argued that "thoughtful politicians" were supportive of a transition period, hinting at the differences within prime minister Theresa May's cabinet over the strategy of leaving the EU.

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“There is, I think, an emerging view among businesses, among regulators, among thoughtful politicians, as well as a universal view among civil servants on both sides of the English channel that having a longer period to manage the adjustment between where we are now as full members of the EU and where we get to in the future as a result of negotiations would be generally helpful,” he told a Treasury committee hearing.

Hammond hinted that the two years set aside for the exit procedure is not enough to finalise a deal and argued for transitional deals to kick in after the two-year period ended.

May is expected to launch the Article 50 exit procedure in March.

EU chief negotiator Michel Barnier last week said the terms of exit would have to be finalised by October 2018 for ratification to be completed in the time set out in the Lisbon treaty.

May also said last month – trying to calm businesses' fears over uncertainty and a possible sudden shock in case there is no deal – that she understood those concerns and would address them in Brexit negotiations.

Hammond said on Monday it would also be in the interest of the 27 remaining EU nations to reach a transitional deal with Britain.

"Collectively, I think transitional arrangements would be beneficial to us," he said.

The EU's Barnier did not rule out a transition deal, but said first the UK needed to decide and outline what kind of relationship it wants with the EU.

Hammond also reiterated his view to MPs that possible controls on migration from EU countries should not cut off the supply of skilled workers needed by British firms.

"I can't conceive of any circumstance in which we would use that system to choke off the supply of highly skilled, highly paid workers," he said.

The chancellor also warned that the Brexit deal could mean a fivefold rise in border inspections if the UK leaves the single market, which would mean investment in IT systems and hiring staff.

"It could certainly add hundreds of millions of pounds to the operation of the customs service," he told MPs.

Brexit minister David Davis however "is not interested" in a transitional deal to protect Britain from the effects of Brexit and that he would consider it only in order to “be kind” to the EU, the Financial Times reported earlier, hinting at disagreements within May's cabinet.

Message from the 27

The 27 EU leaders will hold a discussion without Theresa May this Thursday, when all leaders of the bloc will meet in Brussels.

According to Reuters, the 27 will reiterate the need for the UK to trigger exit talks as soon as possible, and that the EU would not start negotiations before.

The 27 will eventually have to agree on the guidelines for negotiations and give a mandate to the EU Commission to conduct the talks.

EU states to keep control of Brexit talks

Leaders to keep tight control of Commission in Brexit talks, with the UK locked out of the EU's internal kitchen, according to a draft accord seen by EUobserver.

Column / Brexit Briefing

Warm words in London, isolation in Brussels

British PM Theresa May found herself in not so splendid isolation at Thursday's EU summit, where Brexit garnered 20 minutes of time from EU leaders, suggesting Britain is fast approaching European political sidelines.

Johnson challenges May on hard Brexit

In yet an another attempt at becoming Tory leader, the UK foreign secretary argues for a hard Brexit, while PM Theresa May is expected to set out her strategy, including a financial settlement with the EU, on Friday.

Bank agency shuns EU invitations

The EU's banking agency is not visiting cities that want to host the agency post-Brexit "to ensure objectivity". The medicines agency has no such qualms.

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