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| Transitional Brexit deal must be agreed this year, City warns government | Transitional Brexit deal must be agreed this year, City warns government |
| (3 months later) | |
| Square Mile says businesses will start activating contingency plans in 2018 as Philip Hammond tries to calm fears | |
| Jill Treanor and | |
| Rowena Mason | |
| Wed 25 Oct 2017 00.00 BST | |
| First published on Tue 24 Oct 2017 13.47 BST | |
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| The City of London has warned that businesses will start activating Brexit contingency plans unless there is a transitional deal by the end of 2017, as Philip Hammond tried to calm fears that a final agreement may not be reached for another year. | The City of London has warned that businesses will start activating Brexit contingency plans unless there is a transitional deal by the end of 2017, as Philip Hammond tried to calm fears that a final agreement may not be reached for another year. |
| Catherine McGuinness, the most senior policy official at the City of London Corporation – the local authority for the Square Mile – told the chancellor on Wednesday that time was running out a deal to ease the UK’s exit from the EU. | Catherine McGuinness, the most senior policy official at the City of London Corporation – the local authority for the Square Mile – told the chancellor on Wednesday that time was running out a deal to ease the UK’s exit from the EU. |
| In a letter to Hammond before next month’s budget, McGuinness said the UK was facing a “historically defining moment” and warned that the timetable for business to prepare for transition was “tightening very rapidly”. | In a letter to Hammond before next month’s budget, McGuinness said the UK was facing a “historically defining moment” and warned that the timetable for business to prepare for transition was “tightening very rapidly”. |
| “We must have agreement with the EU on transition before the end of 2017,” she added. | “We must have agreement with the EU on transition before the end of 2017,” she added. |
| Hammond was unable to guarantee that there would be any substantial progress on transitional arrangements with the EU by Christmas, a key demand of five major business lobby groups earlier this week. | Hammond was unable to guarantee that there would be any substantial progress on transitional arrangements with the EU by Christmas, a key demand of five major business lobby groups earlier this week. |
| But he moved to reassure businesses that the UK was seeking to pin down some principles of the Brexit transition period as soon as possible, after Theresa May signalled that signing off the final arrangements could take another year. | But he moved to reassure businesses that the UK was seeking to pin down some principles of the Brexit transition period as soon as possible, after Theresa May signalled that signing off the final arrangements could take another year. |
| The prime minister delighted Eurosceptics when she told the Commons on Monday that there would be no transitional deal until the UK had settled its final relationship with the EU, which would not happen until next summer at the earliest and possibly not at all. | The prime minister delighted Eurosceptics when she told the Commons on Monday that there would be no transitional deal until the UK had settled its final relationship with the EU, which would not happen until next summer at the earliest and possibly not at all. |
| However, Hammond struck a different tone 24 hours later, saying the matter of settling the transition period was “urgent and pressing” for businesses. | However, Hammond struck a different tone 24 hours later, saying the matter of settling the transition period was “urgent and pressing” for businesses. |
| “Whilst we are preparing for all outcomes in our negotiations, the government’s objective is to reach a deal. As part of that deal, we want to agree an implementation period during which businesses and governments can prepare for the new relationship and we want to agree the principles of that period as soon as possible,” he said. | “Whilst we are preparing for all outcomes in our negotiations, the government’s objective is to reach a deal. As part of that deal, we want to agree an implementation period during which businesses and governments can prepare for the new relationship and we want to agree the principles of that period as soon as possible,” he said. |
| “Last week at the European council, the 27 agreed to start internal preparatory discussions on guidelines in relation to an implementation period. Together with broad support for the idea in parliament, this should give British businesses confidence we are going to provide them with the certainty they require.” | “Last week at the European council, the 27 agreed to start internal preparatory discussions on guidelines in relation to an implementation period. Together with broad support for the idea in parliament, this should give British businesses confidence we are going to provide them with the certainty they require.” |
| The City of London Corporation added its warning on Wednesday in McGuinness’s letter to the chancellor. She said some businesses were already activating contingency plans and more would do so without more substance from the UK and EU on the length and nature of a transitional period to smooth the path to a future relationship after Brexit in March 2019. | The City of London Corporation added its warning on Wednesday in McGuinness’s letter to the chancellor. She said some businesses were already activating contingency plans and more would do so without more substance from the UK and EU on the length and nature of a transitional period to smooth the path to a future relationship after Brexit in March 2019. |
| “While businesses will have different cut-off points for activating contingency plans, clarity will be needed by the end of this year,” she wrote to Hammond. “For businesses that have already begun activating contingency plans, clarity on transition will allow them to decelerate those plans. | “While businesses will have different cut-off points for activating contingency plans, clarity will be needed by the end of this year,” she wrote to Hammond. “For businesses that have already begun activating contingency plans, clarity on transition will allow them to decelerate those plans. |
| “For others, it may help them avoid taking unnecessary contingency measures entirely. The earlier transitional arrangements are agreed, the more value they will have for businesses and their customers.” | “For others, it may help them avoid taking unnecessary contingency measures entirely. The earlier transitional arrangements are agreed, the more value they will have for businesses and their customers.” |
| Labour and other MPs fighting a hard Brexit said on Tuesday that Hammond’s remarks still did not offer enough reassurance and highlighted the lack of a plan for transition if the UK is forced to leave without a deal. | Labour and other MPs fighting a hard Brexit said on Tuesday that Hammond’s remarks still did not offer enough reassurance and highlighted the lack of a plan for transition if the UK is forced to leave without a deal. |
| Businesses cannot wait. They need to plan now. Jobs are in jeopardy now | Businesses cannot wait. They need to plan now. Jobs are in jeopardy now |
| John McDonnell, the shadow chancellor, said: “The prime minister yesterday sowed more confusion in her statement, giving the impression that a transition is to be negotiated only after we have settled on what the future partnership will be. Businesses cannot wait. They need to plan now. Jobs are in jeopardy now. | John McDonnell, the shadow chancellor, said: “The prime minister yesterday sowed more confusion in her statement, giving the impression that a transition is to be negotiated only after we have settled on what the future partnership will be. Businesses cannot wait. They need to plan now. Jobs are in jeopardy now. |
| “If the prime minister is not willing to stand up to the reckless Brexiteers in her party, will the chancellor? Will the chancellor make it clear, as business leaders have been calling for, that we need the principles of any transition confirmed by the end of this year?” | “If the prime minister is not willing to stand up to the reckless Brexiteers in her party, will the chancellor? Will the chancellor make it clear, as business leaders have been calling for, that we need the principles of any transition confirmed by the end of this year?” |
| Scotland’s first minister, Nicola Sturgeon, joined those saying more clarity was needed. She tweeted on Monday: “The gulf between EU/business/post-Florence understanding of ‘transition’ and what PM now seems to be saying surely needs urgent resolution.” | Scotland’s first minister, Nicola Sturgeon, joined those saying more clarity was needed. She tweeted on Monday: “The gulf between EU/business/post-Florence understanding of ‘transition’ and what PM now seems to be saying surely needs urgent resolution.” |
| After a discussion in the cabinet about the EU’s progress to internal talks about the future relationship, No 10 also stressed that the UK would seek to agree “a broad outline” of the implementation phase as quickly as possible. | After a discussion in the cabinet about the EU’s progress to internal talks about the future relationship, No 10 also stressed that the UK would seek to agree “a broad outline” of the implementation phase as quickly as possible. |
| “What’s clear is that the PM has set out her commitment to getting an implementation and providing that certainty to business. It is within the EU’s guidelines that they would like to have a period of transition. We believe we can work quickly together towards providing that certainty,” Theresa May’s official spokesman said. | “What’s clear is that the PM has set out her commitment to getting an implementation and providing that certainty to business. It is within the EU’s guidelines that they would like to have a period of transition. We believe we can work quickly together towards providing that certainty,” Theresa May’s official spokesman said. |
| “What the prime minister said is that the implementation period is about building a bridge and obviously in order to do that you need to know what the future relationship is going to look like. But what we would also say is that in terms of the broad outline of an implementation period, we believe that we can agree that quickly.” | “What the prime minister said is that the implementation period is about building a bridge and obviously in order to do that you need to know what the future relationship is going to look like. But what we would also say is that in terms of the broad outline of an implementation period, we believe that we can agree that quickly.” |
| However, some Brexit-supporting Tory MPs were delighted that May appeared to be standing firm against the demands from the CBI and others that she agree to a transitional period without a final deal being in place. | However, some Brexit-supporting Tory MPs were delighted that May appeared to be standing firm against the demands from the CBI and others that she agree to a transitional period without a final deal being in place. |
| John Redwood, a former Conservative cabinet minister, said: “You cannot have a transition unless you have in place an agreement about a new relationship which you are then going to move to. As the EU is not yet willing to negotiate a new relationship the idea of transition is premature. No relationship agreement, no transition.” | John Redwood, a former Conservative cabinet minister, said: “You cannot have a transition unless you have in place an agreement about a new relationship which you are then going to move to. As the EU is not yet willing to negotiate a new relationship the idea of transition is premature. No relationship agreement, no transition.” |
| Brexit | |
| Philip Hammond | |
| Theresa May | |
| Trade policy | |
| European Union | |
| Europe | |
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