Chancellor Philip Hammond has backed a Brexit transition period to avoid cliff edge

Mark Sands
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UK General Election 2015 - UK Politics Through A Washington Lens
Hammond is expected to add weight to his argument during a speech at Mansion House (Source: Getty)

Chancellor Philip Hammond has thrown his weight behind business calls for a meaningful transition period to avoid a “damaging” Brexit cliff edge as the UK embarks on negotiations with the European Union.

His intervention comes as business groups ramp up demands for a softer Brexit, including a transition period, access to foreign talent, and a focus on growth.

Negotiations on the UK leaving the EU begin today, with Brexit secretary David Davis meeting chief negotiator Michel Barnier in Brussels.

Hammond said yesterday: “We need a transitional arrangement to get from where we are now to whatever future arrangements we agree with the EU. The most important ask from business – almost more important than what the end result looks like – is that we have a smooth path to get there. Because anything that created a cliff edge in 2019 would be very, very damaging to the UK economy.”

Hammond is expected to add weight to his argument during a speech at Mansion House in the City tomorrow.

Business group London First added this morning: “If a comprehensive deal isn’t reached by March 2019, we need transitional arrangements that ensure British jobs, growth or living standards aren’t threatened while negotiations continue.”

Five business groups yesterday wrote to business secretary Greg Clark, urging him to “put the economy first” in negotiations. The letter from the BCC, the CBI, EEF, the Federation of Small Businesses and the Institute of Directors calls for full and continued access to the European Single Market until a final deal is secured.

A relatively loose migration policy, applied to both skilled and unskilled workers, would also be welcomed by employers. A study from the National Institute of Economic and Social Research, published today, has found that one in four firms say they would be damaged by a potential requirement for EU nationals to have a job offer before they come to the UK.

Read more: Hague joins calls for May to prioritise the economy over immigration

On Thursday, Prime Minister Theresa May is expected to personally offer a deal on the rights of EU citizens who are already in the UK.

It is thought that she will offer to safeguard the rights of these citizens to stay in exchange for equivalent rights for British nationals in the EU.

London First wants “absolute certainty” for EU nationals currently living and working in Britain, while British Chambers of Commerce boss Adam Marshall said a deal would “remove a highly emotive and politicised issue from the complex road ahead”.

May has been at loggerheads with the business community over her determination to put migration reform, including a cap, at the heart of Brexit.

Her stance has attracted criticism from senior Tories including Lord Hague and Scottish Conservatives leader Ruth Davidson, who last week urged May to change tack.

Ahead of the historic Brexit negotiations, Davis said yesterday: “While there is a long road ahead, our destination is clear – a deep and special partnership between the UK and the EU. A deal like no other in history.”

Read more: The next parliament will run for two years so MPs can deal with Brexit

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