The Chancellor has dismissed speculation the UK could pursue a soft Brexit and remain part of the EU’s customs union and the single market on the eve of historic negotiations between London and Brussels.
There have been rumours that Philip Hammond, who backed the Remain camp, would use Theresa May’s weakened authority following the general election to force the Prime Minister to water down her Brexit stance. Last week in Luxembourg he failed to confirm that Britain would depart the single market despite being asked twice.
However, the Chancellor has now moved to quash speculation that he would push Mrs May to abandon the Brexit plans she set out in her speech at Lancaster House in January.
“We’re leaving the EU, and because we’re leaving the EU we will be leaving the single market and, by the way, we’ll be leaving the customs union,” Mr Hammond told the BBC’s Andrew Marr Show, in his first interview since the election. “The question is not whether we’re leaving the customs union.
“The question is what do we put in its place in order to deliver the objectives which the Prime Minister set out in the Lancaster House speech of having no hard land border in Ireland and enabling British goods to flow freely backwards and forwards across the border with the European Union.”
Talks with Brussels to settle the terms of the UK’s departure, including the rights of EU nationals working in Britain, begin today.
Mr Hammond’s comments came as a report by the National Institute of Economic and Social Research and the Chartered Institute of Personnel and Development today warns “the end of free movement of people from the EU will damage UK businesses and public-service delivery unless post-Brexit immigration policies take account of the need for both skilled and unskilled labour from the EU”.
They said that 11pc of UK firms had reported a fall in the number of EU nationals they had hired since last June’s referendum. Some 25pc of businesses also said that a requirement for EU citizens to have a job offer before they come to the country would have a “negative impact” on their operations.
In a letter to Business Secretary Greg Clark, the heads of the Confederation of British Industry, Institute of Directors, British Chambers of Commerce, manufacturers’ association the EEF and the Federation of Small Businesses also yesterday called on ministers to secure “tariff-free goods trade” between the UK and EU and “protection of the benefits of free-trade agreements currently delivered through the European Union”.
The customs union scrapped tariffs between EU countries and established a common tariff system and import quotas for non-members. Leaving it would mean the UK would be free to pursue its own trade policy.