Hammond Says U.K. Is Seeking `Status Quo' Brexit Transition

(Bloomberg) -- Chancellor of the Exchequer Philip Hammond signaled that his government is preparing to announce it wants a “status quo” Brexit transition in which the U.K. temporarily keeps its access to the European Union’s single market after it departs.

“There is general agreement that it would not make sense to ask business to face two sets of changes,” Hammond told the House of Lords Economic Affairs Committee in London. “That implies that a transition or interim period would need to look a lot like the status quo, otherwise businesses will be making one set of changes at the beginning of the interim period and another set towards the end of it.”

He said his “ideal solution” for the transition was “that the trade in goods and services would be able to continue as it does now.” The U.K. would be allowed to conduct negotiations on trade deals, but not implement them until the end of the transition.

To be sure, much of the decision-making is in the hands of the EU not the U.K. as the next round of Brexit negotiations have been postponed ahead of Prime Minister Theresa May’s eagerly-anticipated speech on where she now stands on the divorce and transitional arrangements.

Emerging Consensus

The chancellor’s comments expanded on his remarks in July, when he said people should expect few immediate changes when Britain leaves the EU in March 2019. But in July, his language was more coded. His willingness to be explicit about his goal suggests a Cabinet consensus. Brexit Secretary David Davis said something similar last week. 

May is due to make a speech setting out her goals for Brexit in the next two weeks.

According to her office, it will build on a series of position papers published over the summer to set out details of the “deep and special” partnership the U.K. wants with the EU. It is also likely to reflect the reshaping of British politics that took place when May lost her majority in June’s election.

As it happens, a “status quo” transition period is the stance adopted by the opposition Labour Party at the end of August. 

To contact the reporter on this story: Robert Hutton in London at rhutton1@bloomberg.net.

To contact the editors responsible for this story: Flavia Krause-Jackson at fjackson@bloomberg.net, Ben Sills