Hammond: We’d be mad not to stay as close as possible to EU

PHILIP Hammond set himself on a collision course with Theresa May yesterday by declaring it would be ‘madness’ not to seek the ‘closest possible’ links with the EU.

The Chancellor welcomed a controversial call from business leaders for a delay in leaving the bloc’s customs union and the single market.

CBI director general Carolyn Fairbairn had urged Britain to remain in the two trading arrangements until a final Brexit deal is struck. Yesterday the Prime Minister rejected her demands, saying it would prevent the UK from negotiating its own trade deals – but Mr Hammond struck a softer tone.

He told Bloomberg that most Remain supporters want a ‘ Brexit that looks sensible to them ... that recovers sovereignty for the UK but also recognizes that reality that we live in a very interconnected world, and that the EU will remain our largest trading partner and our nearest neighbours, and that it would be madness not to seek to have the closest possible arrangement with them going forward’.

Of the CBI, Mr Hammond said: ‘I’m glad that the business community is exercising a voice in this discussion. I think that’s helpful.’

He said he wanted to negotiate a ‘transitional structure ... so that the shock to business is minimised for the transition period’. ‘If we lose access to our European markets, that will be an instant effect, overnight, and [people] won’t thank us if we deliver them an instant hit with only a longer term, slowly building benefit to compensate,’ he added.

His comments will anger many Tory MPs, who fear the Chancellor has not come to terms with the result of last year’s referendum.

His intervention came as the Shadow Brexit Secre- tary, Sir Keir Starmer, said Labour would work with the Greens and the SNP to water down Brexit.

He said it was ‘highly likely’ that the Opposition would seek to amend the Repeal Bill to convert EU legislation into British law.

Yesterday also saw business leaders, including the CBI and firms such as BMW, meet with Brexit Secretary David Davis to push for a ‘softer’ divorce from the EU.