In World Economy News 21/01/2017
Chancellor Philip Hammond has warned the process of exiting the EU is likely to last long beyond the two year time frame stipulated by law.
He said the UK’s exit was not just about negotiating a free trade deal, and could involve talks on migration policy and interim arrangements.
“There will be many transitions involved… these will take many years.”
The government has said it will trigger Article 50 – the formal process of leaving the EU – by the end of March.
After that, it will officially have two years to complete the process.
Speaking at the World Economic Forum in Davos, Mr Hammond said the government was still on track to meet this “rigid timeframe”, adding that by the end of March 2019 he expected to “at least” have agreement on the “broad principles of the end state that will exist”.
However, he said establishing “significant new infrastructure” to deal with potential issues such as Britain’s borders and customs “cannot be built and deployed in a few months”, which is why a transition deal would be so important.
“All of these things we have at the moment and all of these things we’d like to work closely with the EU on – these will take many years,” he said.
‘World leader’
He acknowledged that for businesses, clarity over these issues was critical, noting it would be economically “sub-optimal” if countries and companies had to start precautionary spending in case the UK failed to secure similar reciprocal arrangements to now.
Mr Hammond also reiterated Prime Minister Theresa May’s pledge – in her speech at Davos on Thursday – that the UK would be a “world leader” on trade regardless of the relationship it ultimately negotiated with the EU.
“If we were to be, by some catastrophe, closed off from those [European] markets we would have to reinvent ourselves. We would have to find another model, another way to earn our living, to remain competitive in the world.
“And I just want to send out a clear message that we’ve reinvented ourselves before… we will do so again if we have to.”
Mr Hammond also reiterated his threat – made to German newspaper Welt am Sonntag last week – that the UK could change its “economic model” if it is locked out of the single market after Brexit.
“Our first duty as an elected government is to protect the living standards of our people and that means the competitiveness of our economy,” he said.
Source: BBC
