Philip Hammond has attempted to reassure businesses that the UK will seek to pin down some principles of the Brexit transition period as soon as possible, after Theresa May said it would not happen unless there was a final deal with the EU.
The chancellor said the implementation period would be part of the UK’s final deal with the EU, which may not be agreed for another year and could fail to happen at all, but he said efforts would be made to set out guidelines before that point, which he hoped would give businesses confidence.
“Whilst we are preparing for all outcomes in our negotiations, the government’s objective is to reach a deal. As part of that deal, we want to agree an implementation period during which businesses and governments can prepare for the new relationship and we want to agree the principles of that period as soon as possible,” he said.
“Last week at the European council, the 27 agreed to start internal preparatory discussions on guidelines in relation to an implementation period. Together with broad support for the idea in parliament, this should give British businesses confidence we are going to provide them with the certainty they require.”
Businesses have been lobbying intensively for a transitional deal – maintaining the status quo for two years after Brexit – to be agreed this year, before they have to set out their financial plans for 2018.
Labour and other MPs fighting a hard Brexit said, however, that they were still concerned that this would not give businesses enough confidence and highlighted the lack of a plan for transition if the UK is forced to leave without a deal.
John McDonnell, the shadow chancellor, said: “The prime minister yesterday sowed more confusion in her statement, giving the impression that a transition is to be negotiated only after we have settled on what the future partnership will be. Businesses cannot wait. They need to plan now. Jobs are in jeopardy now.
“If the prime minister is not willing to stand up to the reckless Brexiteers in her party, will the chancellor? Will the chancellor make it clear, as business leaders have been calling for, that we need the principles of any transition confirmed by the end of this year?”
Hammond said it was correct that the matter was “urgent and pressing”, but did not provide any guarantees about the timetable.
Scotland’s first minister, Nicola Sturgeon, joined those saying more clarity was needed. She tweeted on Monday: “The gulf between EU/business/post-Florence understanding of ‘transition’ and what PM now seems to be saying surely needs urgent resolution.”
After a discussion in cabinet about the EU’s progress to internal talks about the future relationship, No 10 also stressed that the UK would seek to agree “a broad outline” of the implementation phase as quickly as possible.
“What’s clear is that the PM has set out her commitment to getting an implementation and providing that certainty to business. It is within the EU’s guidelines that they would like to have a period of transition. We believe we can work quickly together towards providing that certainty,” Theresa May’s official spokesman said.
“What the prime minister said is that the implementation period is about building a bridge and obviously in order to do that you need to know what the future relationship is going to look like. But what we would also say is that in terms of the broad outline of an implementation period, we believe that we can agree that quickly.”
This article was written by Rowena Mason Deputy political editor, for theguardian.com on Tuesday 24th October 2017 13.47 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010