UK Treasury chief: Brexit uncertainty could drag on economy


LONDON (AP) — Britain’s economy could face a slowdown because of the uncertainty caused by the decision to leave the European Union, the government’s finance minister said Sunday.

In an illustration of the conflicting forces at work, the Conservative government is facing pressure from dozens of its own lawmakers to make a decisive break with the EU, while a major business group insisted Sunday that Britain must retain access to the bloc’s markets and skilled workforce.

“We’re going to have an unprecedented level of uncertainty, and that’s one of the factors causing many commentators to predict that there will be a slowing of economic growth,” Chancellor of the Exchequer Philip Hammond said.

Hammond, who will unveil the government’s first major spending plans since June’s EU membership referendum in a budget statement on Wednesday, told ITV television “there’s no point crying over” the uncertainty.

“We just have to plan to accommodate it,” he said.

Prime Minister Theresa May’s government has said it plans to trigger two years of formal exit talks with the EU by March 31, but insists it would be foolish to give away its negotiating position before then.

The uncertainty has helped fuel economic jitters and driven down the value of the pound, amid claims that the government is deeply divided about how to approach Britain’s EU exit.

This week the Institute for Government, a nonpartisan think tank, said “a lack of clarity” within government “has caused distractions and delayed work on Brexit.”

The EU has long been a divisive issue for the Conservatives, and May is being squeezed between politicians demanding she apply the brakes to Brexit and those who want her to hurry up and make a decisive split.

Some 60 Conservative lawmakers urged May on Saturday to take Britain out of the EU’s customs union, which guarantees tariff-free trade within the bloc but imposes levies on goods from outside. They also want a guarantee Britain won’t stay in the European Economic Area, which gives non-EU members such as Iceland and Norway access to the bloc’s single market.

The legislators, who back what has become known as “hard Brexit,” include former Cabinet ministers Michael Gove and Iain Duncan Smith.

EU leaders insist Britain will have to leave the single market if it seeks to impose controls on immigration from EU nations — a red line for many supporters of Brexit.

Many businesses, however, say losing access to the single market would be devastating, especially for Britain’s huge banking and financial services sector.

Employers’ group the Confederation of British Industry said businesses need reassurance that the government is not seeking to cut Britain off from the EU.

“Business needs to know we won’t close our borders to Europe’s talent, or lose our privileged access to Europe’s markets,” said CBI president Paul Drechsler in comments released ahead of a speech on Monday.

“We’re not asking for a running commentary, but we are looking for clarity and — above all — a plan,” he said.

Hammond said he did not believe the U.K. faces a “binary choice” between leaving the EU’s existing structures and staying in, but could “negotiate a bespoke arrangement that works for Britain and works for our European partners.”

He urged fellow Conservatives to calm down and let the prime minister lead the exit talks.

“I want to ensure that Theresa May goes into these negotiations with all the cards in her hand, with the maximum negotiating flexibility, so that she can play her hand to the maximum benefit of Britain,” Hammond told the BBC.

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