Two years may be just the start of the negotiations.
U.K. Chancellor of the Exchequer Philip Hammond told Parliament’s Treasury Committee on Monday that the negotiating period for departing members set out in the EU’s Lisbon Treaty will probably not be long enough to work out Britain’s future relationship with the bloc.
As a result, a longer transition period is likely to be needed to smooth the path of Brexit, he said, adding that some officials in other countries are already coming round to that view.
“The further we go into this discussion, the more likely it is that we will mutually conclude that we need a longer period to deliver,” Hammond said.
“There is, I think, an emerging view among businesses, among regulators and among thoughtful politicians, as well as quite a universal view among civil servants on both sides of the English Channel.”
Hammond has long been an advocate of a transitional period after Britain leaves the EU, though David Davis, the Brexit Secretary, is said to have dismissed such concerns in private.
Hammond’s view on Tuesday won support from lawmakers in the House of Lords, Britain’s unelected upper chamber of Parliament.
Two committees said in a joint report that Prime Minister Theresa May must strike a temporary deal as it may be impossible to reach a post-Brexit free-trade agreement in the “extremely tight” timetable for talks.
May needs a transition “game plan” before she triggers the formal start of Brexit negotiations under Article 50 of the Lisbon Treaty, the committees said.
“It is unlikely that a bespoke EU trade agreement can be agreed within Article 50’s two-year period, so a transitional deal is vital for protecting U.K. trade and jobs,” Sandip Verma, who heads one of the panels, said in a statement.
“The complexity of the issues and the tight timetable require a significant scale-up in capacity in government departments and clear leadership.”
Labour vs. Hard Brexit
The U.K.’s main opposition, the Labour Party, is stepping up its fight to protect Britain’s ties to the EU after Brexit.
Keir Starmer, Labour’s Brexit spokesman, will pledge to fight against a “hard” break from the EU in a speech at Bloomberg’s European headquarters on Tuesday, promising instead to work for co-operation with Britain’s biggest market.
A “hard Brexit” would “entail a range of harmful new barriers to trade and a desperate rush to sign new agreements with third party states to compensate,” Starmer will say, according to extracts of the speech released by his office.
Such a path would lead to “a global race to the bottom which would not only put our economy and jobs at risk, but which would also abandon our shared scientific, educational and cultural endeavors with the EU.”
Labour is seeking to make its mark on the Brexit debate after a lackluster showing in two recent by-elections that were seen as tests of May’s handling of Brexit. Labour came a distant third in pro-Remain Richmond, in west London, and fourth in Leave-supporting Sleaford, in eastern England.
- The EU will push for talks to start quickly after Article 50 is triggered, documents show
- London’s derivatives crown was already slipping before the Brexit referendum
- Online-only fashion retailer Asosplans to double its U.K. manufacturing after the pound’s plunge
On the Markets
Tuesday sees release of the latest U.K. inflation data, the final reading before heading into 2017, when consumer prices are widely expected to begin a noticeable rise. Only a modest increase is likely today, according to a Bloomberg survey of economists, but the combined effects of the pound’s fall, rising input prices and the climbing oil price is worsening the outlook for inflation next year.
We’ve seen Marmite prices soar and Pot Noodles yanked from the shelves of British supermarkets. Could chocolate be the next victim of Brexit?
German cocoa processor Euromar Commodities was forced to start insolvency proceedings last week after its supplies of cocoa beans were interrupted by the collapse in the value of the pound.
Euromar uses the London-based ICE Futures Europe market to hedge the price of its raw materials, and the cost of protection soared after the Brexit vote as a result of the drop in sterling. That left the company short of cash to pay its suppliers.
“I am therefore negotiating credit in order to resume business operations,” Rolf Rattunde, a partner at law firm Leonhardt Rattunde, said in an e-mailed statement Monday. “The intensive discussions with lenders and shareholders make one feel optimistic.”