Theresa May's office has confirmed that free movement of EU citizens to Britain will end in March 2019.
After yet another weekend of Cabinet divisions being played out in public, the Prime Minister's spokesman was forced to clarify her position on immigration, saying it was “wrong… to suggest that free movement will continue as it is now."
Proposals for a new immigration system after Brexit will be brought forward "in due course", the spokesman added.
May - who is currently on holiday in Europe - was backing comments made by immigration minister Brandon Lewis this weekend, after yet more confusion over what the official stance is.
Lewis said told the BBC that the government was “very clear” that “free movement of labour ends when we leave the European Union in the spring of 2019.”
But it puts the Prime Minister at odds with chancellor Philip Hammond, who has been pushing for a longer transitional period than many of his Cabinet colleagues.
Over the last few days cracks have surfaced between him and trade secretary Liam Fox, who told the Sunday Times that senior government ministers had not reached a consensus on retaining free movement of people for a transitional period, a proposal which was put forward by Hammond on Friday.
Catherine McGuinness, policy chairman at the City of London Corporation said today's announcement "reiterates the need for clarity around the UK’s future migration system.
“From the outset, we have been clear that the financial and professional services sector relies heavily on European and international talent - it currently employs around 56,000 EU workers. Ensuring the UK can continue to fill the very best jobs with the finest talent will be central to the success of the UK post-Brexit.
"As a sector that provides 2.2 million jobs and £72bn to the economy, we are hopeful that the implications for the financial and professional services sector are understood."
Last week Josh Hardie, CBI's deputy director-general, stressed the value EU workers added to the British economy.
“Workers from across Europe strengthen our businesses and help our public services run more smoothly – any new migration system should protect these benefits while restoring public confidence," he said, adding: "Businesses urgently need to know what a new system will look like – during transition and afterwards.”
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