UK Markets close in 7 hrs 41 mins

Britain will not become a tax haven after Brexit, says Philip Hammond in U-turn

Philip Hammond has backtracked and said Britain will not become a tax haven after Brexit.

The chancellor had said in January that the UK would do ‘whatever we have to do’ to remain competitive after pulling out of the European Union.

However, he has now told a French newspaper that the UK will not cut tax and regulations in an effort to undercut countries in the EU.

He told Le Monde that the tax percentage raised by the British economy ‘puts us right in the middle’ of European countries.

He added: ‘We don’t want that to change, even after we’ve left the EU.

‘I would expect us to remain a country with a social, economic and cultural model that is recognisably European.

‘I often hear it said that the UK is considering participating in unfair competition in regulation and tax. That is neither our plan nor our vision for the future.’

MORE: UK may not be able to strike trade deals until after Brexit transition
MORE: Freedom of movement to end in 2019 once Britain has left the EU

The new message from Mr Hammond is notably softer from his tone back in January, when he told German newspaper Welt am Sonntag that the UK would do what was needed if it was unhappy with the trade deal with the EU.

Britain will not become a tax haven post-Brexit, the chancellor said (Picture: Rex)

He said then: ‘If we have no access to the European market, if we are closed off, if Britain were to leave the European Union without an agreement on market access, then we could suffer from economic damage at least in the short-term.

‘In this case, we could be forced to change our economic model and we will have to change our model to regain competitiveness.’

At the time, Labour leader Jeremy Corbyn said it sounded like ‘a recipe for some kind of trade war with Europe’.

In his latest interview, the chancellor also said he wanted both EU workers and British people abroad to be able to continue with their family life.