Hammond has hit on best way to avoid Brexit chaos

The Chancellor deserves credit for a strategy that will smooth every step of our departure from the EU

For the first months after Britain voted for Brexit, many people around the world underestimated how likely it was that we would actually leave the EU. Everywhere I went abroad, business leaders and politicians asked me how we would get round the result, and whether we would lose heart about leaving when it got difficult.

I explained to them that this really is a democracy. The electorate voted to leave the EU, and therefore we leave. What is more, the number of people who voted to do so was higher than the number of votes cast for any government in our history. To me and many of my former colleagues in government who preferred to remain, the argument was over. In the recent general election, both main parties were clear that they were committed to the referendum outcome. Globally, the message has now got through.

Yet just as that message was accepted, the voters pulled off another surprise and refused to give a majority to the ministers negotiating the exit, clouding the issue with fresh uncertainty about the date of the next election, the durability of the Government and the prospects of passing the complex legislation required to operate outside the EU.

Now, there is a fresh danger – that with the referendum behind them, the enthusiasts for Brexit will underestimate the danger that things could go so badly wrong that the country turns against the people trying to deliver what it voted for, or even the idea itself.

The biggest danger is a slowdown in the economy that becomes associated with Brexit or is exacerbated by it. Although firms and consumers have generally powered along since the referendum and defied all predictions to the contrary, there are many signs that the average household will shortly have to tighten its belt. Debts have soared and inflation has risen – both trends made worse by the attachment of the Bank of England to keeping interest rates too low for too long.

By the end of the year, if there is no clarity on where businesses will stand in March 2019 when we officially leave the EU, many more will be announcing that they need to move some of their operations, or offices or new investments elsewhere. The UK will be at risk of lagging behind other developed economies as a result of its own choices.

The EU’S negotiators can see these pressures coming, and will be correspondingly emboldened to maintain a hard line over the coming weeks on the rights of migrants, the future of the Irish border, and the massive issue of how much is owed by Britain to Brussels. Without significant concessions from London, they will be tempted to stall negotiations by October, adding to the gloom in boardrooms about the economy. The risk of leaving the EU without an agreement could grow, but without sufficient time to put in place our own customs and immigration systems either, raising the prospect of chaos.

While all this is going on, most voters are not going to be very amused, to put it mildly. Their mood will not be improved by tuning in to the proceedings of Parliament, where by this autumn the Repeal Bill will be generating weeks of long debates, furious rows and cliff-hanging votes – and this will only be paving the way for years of legislation to come. A further mass of laws will need to be passed quickly to be ready in time, not to mention the actual terms of Brexit when those are finally agreed. And be prepared for the Supreme Court to decide – as it did with invoking Article 50 and the initiation of the whole process – that the final terms have to be ratified with legislation, which might then be difficult to pass at all.

Take all of these risks together and there is the clear potential for Brexit to become the occasion of the greatest economic, diplomatic and constitutional muddle in the modern history of the UK, with unknowable consequences for the country, the Government and the Brexit project itself. What is quite obviously needed is an approach that cuts through all of these problems simultaneously; that makes the negotiations simpler, reduces the need for rushed legislation, reassures the business world and commands wide support across Parliament.

Is it possible to do that? Yes, and the Chancellor, Philip Hammond, deserves great credit for putting forward such an approach. He has evidently been trying to persuade his Cabinet colleagues that we should be seeking to stay in the EU single market and customs union during a transition and “implementation” phase lasting to 2022, followed by a free trade deal with our former partners after that. This is seen by longstanding advocates of leaving as a “soft” position or a climbdown. But in reality it is a plan to rescue Brexit from an approaching disaster.

The attractions of the Chancellor’s plan, which sounds similar to joining the European Economic Area as a transition, are immense. First, the negotiations with the EU would become much easier, because the task of agreeing a special transitional regime as well as an eventual free trade agreement could be skipped. In addition, the row over money would be partly solved as we would keep making EU budget payments in 2020 and 2021. Much of the discord is over those years because they fall in the period for which spending commitments have already been made.

Second, we would not need to set up a whole new customs system in the next 18 months, but would have years to get it ready. Third, the volume of new laws needed in the immediate future would be greatly reduced. Fourth, businesses would be under much less pressure to make early decisions that would hit jobs and incomes in Britain. Fifth and crucially, it would be easier to pass through a difficult parliament the terms of Britain’s departure.

This should, of course, be the plan of the whole Government, agreed in advance and relayed unanimously. But even in the absence of that, it is the most sensible and workable approach. Mr Hammond was against leaving the EU. He might nevertheless have put forward the one way to leave without many millions of people becoming disenchanted with the idea, and for that he deserves the support of even the most ardent Brexiteer.