Chancellor Philip Hammond has admitted that a transition period is likely after the UK has formally left the EU in 2019 to help ease the exit process. The Chancellor said that a temporary arrangement following the two years of Article 50 negotiations was in the interests of both the UK and the EU in order to protect businesses from a sudden break in trade relations – “there is an emerging view among business, among regulators and among thoughtful politicians that having a longer period to manage the adjustment would be helpful, would tend towards a smoother transition and would run less risk of disruption.” These recent comments contrast starkly with those of David Davis, the Brexit secretary, who told financial institutions last month that he was “not really interested” in a transitional arrangement. The Prime Minister has indicated that she is in favour of a temporary deal to avoid a “cliff-edge” exit for business but a spokesperson later said Theresa May’s words had been misinterpreted. The Chancellor’s recent comments will be welcomed by many banks and financial institutions which have been pressing hard for a transitional deal in order to avoid the need to draw up emergency contingency plans.
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