UK Hammond Backs Brexit Transition; Timescale Challenging

By David Robinson and Jamie Satchithanantham

     LONDON (MNI) - UK Chancellor of the Exchequer Philip Hammond said it would

be very challenging for the UK to create new border arrangements in time for its

planned exit from the European Union in March 2019, noting that this

strengthened the case for negotiating a transitional deal.

     Hammond said that while the government aspired to a transitional deal he

could offer no guarantee of one, as it depended on how negotiations panned out.

One compromise that the UK has offered to the EU is that while it wants to be

free to try and negotiate new trade deals with non-EU countries during the

transitional period it will not bring any of these deals into force during it.

     Hammond, giving evidence to the House of Lords Economic Affairs Committee,

came up with no fresh thinking on Brexit but instead highlighted the severity of

the challenge the government faces.

     "The government has made it clear that its aspiration is to negotiate a

transitional deal or interim period. That, of course, has to be negotiated so

that is an aspiration -- we can't guarantee that it will be possible to do

that," Hammond said.

     He was asked if it would be possible to create a near frictionless border

by applying new technologies to facilitate the movement of goods, with the open

border between Ireland and the UK posing a particular problem.

     "The time scales are very challenging and that's another reason for seeking

a transitional or interim period. It's not only business that needs time, it's

government, agencies on both sides of the channel and both sides of the Irish

border," Hammond said.

     "The consequence of not agreeing an interim period I think will be that

public agencies in the UK and in our European neighbours will find that they are

incurring quite significant expenditures," he added.

     UK customs (HMRC) is preparing for a "no deal scenario" and Hammond

acknowledged that if this happened not everything would be in place in time.

     "HMRC is preparing for all eventualities, including a no deal scenario. We

recognise that the timescales are very challenging and in a no deal scenario,

not everything we want to be in place will be in place from day one but we will

have a working system," he said.

     Just ahead of his evidence to the Lords committee Hammond announced the

date of the next Budget, which will take place on November 22.

--MNI London Bureau; tel: +44 203-586-2223; email: david.robinson@marketnews.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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