Official: Brexit affecting economy
Finance chief: Uncertainty is worst problem
LONDON — A worst-case Brexit scenario could see all air traffic between the U.K. and the European Union grounded the day after Britain leaves the bloc on March 29, 2019, Britain’s finance minister said Wednesday.
Philip Hammond said he considers that outcome highly unlikely, but he said there must be rapid progress on divorce negotiations to stop uncertainty acting as a dampener on the British economy.
Leaving the EU means untangling four decades of laws, regulations and agreements covering everything from food standards to aviation.
Hammond said it’s conceivable “there will be no air traffic between the U.K. and the European Union on the 30th of March 2019, but I don’t seriously think anybody believes that is where we will get to.”
He said uncertainty about Brexit is weighing on the economy, and “we need to remove it as soon as possible by making progress” in talks with Brussels.
Hammond said there was a “need for speed” from the 27 other EU nations.
“We are being affected by uncertainty around the negotiating process we are engaged in at the moment,” Hammond said. “There is plenty of anecdotal evidence that businesses and consumers are waiting to see what the outcome is, or at least what the direction of travel is, before firming up investment decisions and consumption decisions.”
Hammond was answering questions from lawmakers, a day after the International Monetary Fund downgraded its forecast of U.K. economic growth to 1.7 percent this year and 1.5 percent in 2018. Britain was the only major economy not to have its forecast raised by the IMF.
A fifth round of negotiations is being held this week, with talks bogged down in details of the divorce settlement, including the amount of money Britain owes the bloc.
Hammond said the government is “planning for all scenarios including a no-deal scenario” in which divorce talks end without a deal on trade, security and other relations.
“At the moment, although of course we hope for a different outcome, we cannot be certain of that different outcome,” he said.
But he said he was not committing large sums to set up infrastructure such as truck parks and English Channel ports, as some Brexit-backing lawmakers have demanded.
He said that “every pound we spend on contingent preparations for a hard customs border is a pound we can’t spend on (health care), social care, education or deficit reduction.”