Philip Hammond: Brexit ‘cloud of uncertainty’ is damaging UK economy

Posted On: 
11th October 2017

The UK economy is under a "cloud of uncertainty" because of Brexit, Philip Hammond has declared.

Chancellor Philip Hammond was grilled by MPs at the Treasury Select Committee
Credit: 
PA Images

In an apparent swipe at Tory Brexiteers, the Chancellor also told MPs he would not spend cash in expectation of Britain failing to strike an exit deal as a "demonstration point" before it is absolutely necessary.

Speaking at the Treasury Select Committee, Mr Hammond hit out at EU negotiators for not engaging in talks on a transition deal, saying it was hampering the country’s economic prospects.

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This follows a report from the International Monetary Fund, which found that the UK was underp-erforming compared to other advanced economies.

The Chancellor told MPs the emerging economic weaknesses were due to Brexit negotiations and said there was a “need for speed” in agreeing a transition deal in order to reassure business.     

"I think it reflects the sense that while the UK’s economy is fundamentally strong and in good shape, we are being affected by uncertainty around the negotiation process that we are engaged in at the moment.

“And I think there is plenty of anecdotal evidence that business and consumers are waiting to see what the outcome is or at least what the direction of travel is before firming up investment decisions, consumption decisions.

“So my general view of our economy is that it’s fundamentally robust, we have some very positive things going for us, so strong outlook for the future, but the cloud of uncertainty is acting as a temporary dampener and we need to remove it as soon as possible by making progress in the negotiation process.”

A post-Brexit transitional deal, he continued, was a “wasting asset,” and said progress on it must be made by Christmas.

Following up on an earlier Times article, Mr Hammond dismissed the need for costly contingency planning for a ‘no deal’ scenario.  

“I don’t believe we should be in the business of making potentially nugatory expenditure until the very last moment where we need to do so. We will be ready, we will not spend it earlier than necessary just to make some demonstration point."

"The EU knows we mean business,” he added. 

TRANSITIONAL DEAL

In a swipe at EU officials, the Chancellor said the only work that has been done so far on a transitional deal, “has been done from the UK,” and called on negotiators to get round the table.

“When friends have an issue to resolve they sit down and talk about it,” he said.

The fifth round of Brexit talks will begin in Brussels tomorrow.