Brexit not finished in 2019? Hammond backs ‘interim’ arrangement before full EU deal
PHILIP HAMMOND today backed an interim Brexit agreement before Britain fully decides its post-Brexit relationship with Brussels.
The Chancellor insisted a transitional arrangement would work in the interests of both the UK and the remaining 27 EU member states.
It is the clearest sign yet the Government will seek to negotiate a short-term Brexit deal at the end of Article 50 talks, scheduled to end in April 2019, before completing a full exit agreement with the bloc at a later date.
Appearing before House of Commons’ Treasury Select Committee, Mr Hammond agreed an in-between Brexit solution would be necessary.
The Chancellor told MPs there is “an emerging view” among businesses, regulators, politicians and civil servants both in Britain and the EU that “having a longer period” to complete Brexit would be “generally helpful”.
Under the terms of Article 50 of the Lisbon Treaty, the legal mechanism for quitting the EU, a departing member state has two years to agree an exit deal.
But Mr Hammond insisted Brexit would be “a smoother transition and would run less risk of disruption” if a further period of negotiations was allowed beyond an initial exit agreement.
The Tory minister, who supported Remain during the EU referendum campaign, highlighted “risks to financial stability” as a “very real concern” during Brexit talks.
Mr Hammond insisted a transitional agreement would only be part of exit negotiations if there was a “meeting of minds” between Britain and Brussels.
But he claimed an interim deal would be “beneficial” to both sides.
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Collectively I think transitional arrangements would be beneficial to us.
Tory MP Steve Baker, a leading Brexit campaigner and member of the Treasury Select Committee, supported the idea of a withdrawal agreement before a later permanent deal between Britain and the EU.
The High Wycombe MP, chairman of the European Research Group of Tory MPs, said: “Our withdrawal agreement should allow financial services and other business to proceed uninterrupted on the basis of mutual recognition and equivalence.
Insisting an interim arrangement would be “possible, realistic and in our mutual interests, Mr Baker added: “A later broad and deep bilateral free trade deal on the basis of global standards and national recognition would be permanent.”
“If our withdrawal agreement meets the tests set out by the Prime Minister, there will be no problem. Her requirements were robust.”
The Prime Minister previously hinted she would chase a transitional deal during a speech to the Confederation for British Industry’s annual conference last month.
Theresa May claimed “people don’t want a cliff edge” at the end of Article 50 talks.
But she came under fire from other Brexit campaigners who claimed a transitional deal would fuel uncertainty while expressing fears Britain could be left stuck with an unsatisfactory interim deal.
Mr Hammond’s comments this afternoon clash with last week’s reports Brexit Secretary David Davis had told a meeting of City figures he is "not really interested" in a transitional deal.
Labour MP Stephen Kinnock MP, supporter of the Open Britain campaign seeking to keep the UK tied to the EU's Single Market, said: “It’s encouraging to see that Philip Hammond understands the need for a transitional deal to stop Britain falling into a hard, destructive Brexit that would take our economy over a cliff edge.
“There is a growing consensus that agreeing a new trading relationship between Britain and Europe may take much longer than the two years specified by Article 50. Not signing a transitional arrangement would mean punishing tariffs which would hit British businesses and raise prices in the shops.
“Recent polling has shown that people, even many Leave voters, did not vote for a Brexit that would leave us poorer.”