Chancellor Philip Hammond confirmed the Brexit negotiations are moving at a snail’s pace that may result in the UK crashing out of the EU, in revealing evidence to the Treasury committee yesterday (October 11).
Hammond was keen to lay the blame for the lack of progress and the risk of a no deal exit at the door of the EU, but Unite said the government must take responsibility for its lack of a “coherent strategy”.
Saying that a “cloud of uncertainty” over Brexit was acting as a “temporary damper” on the UK economy, the chancellor admitted that both businesses and consumers were waiting to see the direction of travel in negotiations before firming up their investment and consumption decisions.
Hammond accepted employers need certainty over both the length and nature of the proposed transition period after March 2019 and the long-term relationship with the EU, so that they can “avoid worst case scenario planning”, including potential relocation that could lead to the loss of thousands of UK jobs.
He said “astonishingly” talks had not yet begun on a post-Brexit deal.
Discussion on the transition period was also yet to commence, Hammond told MPs, even though such an arrangement was a “wasting asset” as time passed.
“It has a value today, it will still have a very high value at Christmas and early in the New Year, but as we move through 2018 its value to everybody will diminish significantly,” the chancellor said.
After blaming Britain’s EU partners for the failure to discuss these key issues and for imposing the structure of negotiations, he went on to warn that the UK had to prepare for the possibility of no deal and a “bad-tempered breakdown” in relations with the EU.
“If it is a World Trade Organisation (WTO) regime with no deal, there are then two further potential levels that you have to consider. One is no deal, WTO, but a friendly agreement that we are not going to reach a deal but we will work together to cooperate to make things run as smoothly as possible.
“But, bluntly, we also have to consider the possibility of a bad-tempered breakdown in negotiations where we have non-cooperation, and, worst-case scenario, even a situation where people are not necessarily acting in their own economic self-interest. So we need to prepare for a wide range of scenarios.”
Worst case scenarios included no air traffic moving between the UK and the EU on exit day, and the EU not being able to share customs data with Britain.
Shadow transport minister Karl Turner said flights being grounded would be a “total disaster for the aviation sector.”
He said, “The impact of this uncertainty will be felt by passengers long before March 2019, as airlines may not be able to sell advance tickets if a deal is not reached. If air cargo is grounded we will not be able to import or export freely.
“It is imperative that the government prioritises securing a deal for the aviation sector and provides the industry with the certainty it needs in the run up to March 2019 and beyond.”
Unite assistant general secretary Steve Turner said Hammond should look to the responsibility his own party bears for the crippling lack of progress during seven months of negotiations with the EU.
“The main barrier to the negotiations is that the Tories are in the midst of a civil war over Brexit. One half of the party is determined to throw Britain over an economic cliff edge, while the other, more sensibly, sees the need for a softer exit,” Turner said.
“The result is that the government is paralysed and unable to present a coherent strategy that would allow the talks to move forward.”
He added, “The risk of crashing out of the EU with no deal, which will seriously harm the living standards of millions of people, is now very real. But the Tories are more interested in fighting amongst themselves than working for the good of the country.
“If Theresa May cannot provide the leadership needed to secure a transition period and obtain a post-Brexit trade deal with the EU, she should step down and allow a Labour government to get on with the job.”