The Courier & Advertiser (Fife Edition)
Money available to prepare for ‘no deal’
Chancellor says large sums will be spent to ensure the UK is ready
Philip Hammond has indicated he is ready to spend large sums to get Britain ready for a “no deal” Brexit, as it emerged that £250 million has already been allocated for EU withdrawal preparations.
The Chancellor said there was a “need for speed” from the other 27 EU nations in agreeing a transition to the postBrexit era, both to deliver certainty for businesses and to avoid wasteful government spending on contingency planning.
Delays in beginning talks on the future UK/EU trading relationship – caused by Brussels’ insistence that the divorce deal must be settled first – were creating a “cloud of uncertainty” which was acting as a damper on the UK economy, he said.
Mr Hammond used an article in The Times to say that he was not yet ready to turn on the tap for spending on infrastructure, like lorry parks at Channel ports, which may be needed if the UK and EU fail to reach an agreement by the official Brexit date of March 2019.
Spending money now on Brexit preparations would divert cash away from priorities like the NHS, social care and education, and the investment may turn out to be unnecessary if talks in Brussels result in a good deal, he said.
But he later told MPs that the Treasury was “prepared to spend when we need to spend” on contingency plans for “no deal” outcomes including a possible “bad-tempered breakdown” in negotiations.
The Government would need to decide at some point what was the “realistic” worst case it needed to plan for, but it would wait until the “last point” before committing funds, he said.
Theresa May told MPs at Prime Minister’s Questions in the Commons yesterday that £250 million has already been committed from Treasury reserves for Brexit preparations by government departments including environment, transport, the Home Office and HM Revenue & Customs during this financial year.
“We are preparing for every eventuality, we are committing money to prepare for Brexit, including a no deal scenario,” the PM told MPs.
“Where money needs to be spent, will be spent.”
The announcement was hailed as “great” by Suella Fernandes, chairwoman of the influential European it Research Group of Brexit-backing MPs.
European Council president Donald Tusk indicated on Tuesday that he does not expect EU leaders to give a green light for the opening of talks on trade and transition at a crunch summit in Brussels next week, and suggested the move may even be delayed beyond the end of this year.
But Mr Hammond said businesses need certainty as soon as possible in order to make investment decisions and sign contracts covering periods after the official date of Brexit.
Early agreement would “avoid people having to make worst-case assumptions and acting on them in a way that would be damaging to their businesses, damaging to the UK economy, damaging to business partners in the other EU countries and damaging to the EU’s economy as a whole”, he said.
“Astonishingly”, work on the future relationship was under way in the UK but not on the EU side, even though there was “a high degree of consensus” in European capitals that agreement on transition arrangements was “a sensible thing to do and a practical thing to do”.
Mr Hammond urged EU leaders to allow “at least exploratory discussions” to begin, warning that progress on the kind of interim deal proposed by Theresa May in her speech last month in Florence would mean “breaking out” of the negotiation structure set out by the European Commission.