Hammond wants transitional Brexit deal to minimise business shock

Britain ought to arrange a transitional Brexit agreement that recreates its membership of EU structures as nearly as possible, its finance minister said on Friday, recognising the nation can’t remain in the single market or customs union.

Philip Hammond invited corporate contribution into the discussion on managing Brexit, a day after the CBI employers association said Britain should remain in the EU’s single market as it works out new ties with the coalition after Brexit in 2019.

“I’m glad that the business community is exercising a voice in this discussion. I think that is helpful,” he said, adding: “I do not believe it is either legally or politically possible to say in the customs union and the single market.”

Hammond, addressing on the sidelines of a G20 summit in Hamburg, stated his choice was for Britain to arrange a “transitional structure” that takes it out of the single market and customs union “but in the transition phase replicates as much as possible of the existing arrangements.”

The goal would be to minimise the blow to the industry.

Britain could arrange new trade deals with nations outside the EU, but this would include implementation points over time. In the short term, London needed to work out a transitional agreement with the EU.

“To people who are looking to us to protect jobs, economic growth, living standards, they won’t thank us if we deliver them an instant hit with only a longer term, slowly building benefit to compensate for it,” Hammond said.

British companies have begun to push harder for a Brexit arrangement that causes as little disturbance as possible after voters missed to back Prime Minister Theresa May’s strict approach to divorce compromises with the EU in an election last month.

The result, which lost May her majority in parliament, has revived the debate about how Britain should withdraw from the EU.

Hammond asked for an understanding with the EU that “keeps trade flowing in both directions across the UK-EU border but at the same time allows us as much leeway as we can get to open up new markets for UK goods and services”.

In the long run, he said Britain desired an arrangement that is “very business friendly … giving as full as possible reciprocal access to markets and as frictionless a border for our goods traffic as we possibly can achieve.”

Questioned if there was any possibility of Britain not pushing through with Brexit, Hammond responded: “No, I think the British people have made up their minds.”

The EU was on a long-term way to more extensive political integration, and the British people were not pleased with that idea, he stated, pointing to Britain’s connection with the United States as a potential model for future relations with the EU.

“We’re not in a political union with them,” he said of the United States. “Yet we have the closest possible partnership and collaboration, and I hope in future we will a similarly easy and comfortable relationship with our European Union neighbours.”