Just what he wanted! Hammond predicts soft Brexit in weeks

THERESA May has a ‘good chance’ of striking a soft Brexit deal with Labour in the coming weeks, Philip Hammond said last night.

Speaking in Washington ahead of an IMF meeting, the Chancellor said the Government and the Labour leadership ‘agree on the fundamentals’ of Brexit.

He also said he expected Parliament to vote again on whether to hold a second referendum – but warned that the new Brexit delay would not give time to hold one.

And Mr Hammond, who has long favoured a softer Brexit, urged MPs to back a revised Brexit deal, saying there was ‘ a phenomenal amount of investment being held off’ by business.

Controversial Brexit talks continued yesterday, with David Lidington, the de facto deputy prime minister, and Environment Secretary Michael Gove meeting Shadow Chancellor John McDonnell. More talks are expected next week as the Prime Minister tries to cobble together a deal that can win a Commons majority and get Britain out of the EU.

Tory Eurosceptics have bridled at the prospect of a soft Brexit deal with Labour. International Trade Secretary Liam Fox has described the idea of a customs union, which is favoured by Labour, as ‘the worst of both worlds’.

But Mr Hammond, who was involved in the talks this week, said there was ‘a good chance of being able to reach an agreement on a way forward over the next few weeks’.

‘We agree on quite a lot,’ he said. ‘ The Labour Party is clear that we have to deliver Brexit, they are clear we have to deliver freedom of movement. We have some disagreements about priorities and about approach but we agree on the fundamentals.’

Labour leader Jeremy Corbyn is under intense pressure from Labour activists to demand a second referendum as the price of any deal.

Mr Hammond said it was ‘very likely’ that Parliament would get another chance to vote on a second referendum, which has already been rejected by MPs.

But he said the Government remained opposed to the idea – and warned that the new October 31 Brexit date agreed this week in Brussels would not give time for another poll.

Mr Hammond said Labour is ‘deeply divided on this issue and will have to decide where it stands as a party’. He also confirmed that Mrs May ‘doesn’t have any intention of leaving’ her job until she has taken Britain out of the EU.

The Chancellor said Brexit wrangling had harmed British business and ‘damaged’ our international reputation.

He said ‘ a phenomenal amount of investment’ in the UK is being held in ‘suspended animation’ until there is clarity on Brexit. British firms had £750billion in cash sitting on their balance sheets that could be unleashed.

Mr Hammond also spoke out about the European Parliament elections. ‘Clearly nobody wants to fight the European elections – it feels like a pointless exercise,’ he told the BBC.

‘The only way we can avoid that is by getting a deal done quickly and if we can do that by May 22 then we can avoid fighting European elections.’