Philip Hammond: Brexit deal won’t be agreed before Commons vote

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Chancellor Philip Hammond has suggested Britain and the European Union will not finalise proposals for a trade deal before MPs have voted on the Brexit withdrawal agreement.

His comments appear to put him at odds with Theresa May, who has said the UK can complete negotiating a free trade deal with the EU before Brexit day on March 29 2019, at which time a separate withdrawal and transition agreement is expected to be in place.

Chancellor Philip Hammond, Picture: Matt Dunham/PA Wire

Chancellor Philip Hammond, Picture: Matt Dunham/PA Wire

MPs won the right to have a “meaningful” vote on the withdrawal agreement after Tory Brexit rebels inflicted a defeat on the Government last month.

But Mr Hammond’s admission that MPs are unlikely to know the proposed details of the future UK-EU relationship has led to accusations they will be voting “with their eyes closed”.

While the Prime Minister has insisted the UK can finalise the future relationship in time for exit day, EU chief negotiator Michel Barnier has indicated he was working towards reaching simply a political agreement by October 2018, which would fall some way short of a full trade deal.

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Mr Hammond’s comments appear to be in line with Mr Barnier’s view that a full trade deal is more likely to be signed during a post-Brexit transition period of around two years.

Asked if he expected the details of the future relationship to be laid out in full by the time Parliament votes on the withdrawal deal, the Chancellor told Bloomberg TV: “Probably not the full details, but we would expect the high level shape of the future relationship to be emerging by that time.”

Mr Hammond also stressed Britain would reject any trade deal which did not include financial services, although he revealed the Government was no longer seeking to maintain “passporting” rights for City firms.

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Mr Barnier last month insisted that there was “no place” for financial services in the kind of free trade agreement which is likely to be available to the UK.

But the Chancellor told a panel discussion in Davos: “Those who casually suggest that financial services won’t be part of a deal aren’t looking at the numbers.

“Services - and financial services - have to be part of a deal. We run a £100 billion trade in goods deficit with the EU, only partially offset by a £40 billion trade in services surplus.

“The only deal that can ever get done is one which is fair to both parties, and a deal which included goods but didn’t include services could never be fair, could never be attractive to the UK.”

He told Bloomberg the UK was looking at “enhanced regulatory equivalence” to keep trade flowing freely rather than passporting, but said it has to be under a regime that is not “dependent on the whim” of the EU.

Mr Hammond also rejected demands from the CBI for Britain to stay in the customs union.

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“We won’t be able to stay in the EU customs union because we won’t be members of the European Union,” he said.

“But making sure that goods can flow with low friction across the border between the UK and the EU is very important to both sides so I’m sure we will want to form a close customs agreement with the European Union to make sure that happens.”

Green Party co-leader Caroline Lucas said on behalf of the Best for Britain anti-Brexit campaign: “The Chancellor has let the cat out of the bag with these comments.

“He wants MPs to vote with their eyes closed on the final deal - and to ignore the serious damage Brexit will do.”

She added: “MPs need to be able to vote with the full facts in front of them, anything else would be utterly unacceptable.”