Post-Brexit UK will do whatever it takes to be competitive
Chancellor of the Exchequer Phillip Hammond gave an interview to German newspaper Welt am Sonntag on Sunday, where he claimed the U.K. would do “whatever we have to do,” to remain competitive if access to the single market doesn’t pan out post-Brexit. The interview was published on the same day that U.K. newspaper The Sunday Times reported Prime Minister Theresa May will pursue a “hard Brexit” – that is, a Brexit that doesn’t negotiate over immigration and other crucial European interests. Leader of the opposition, Jeremy Corbyn, has criticized Hammond over the comments, claiming that they sounded like trade war or taxation undercutting threats.
Hammond said: “If Britain were to leave the European Union without an agreement on market access, then we could suffer from economic damage at least in the short-term. In this case, we could be forced to change our economic model and we will have to change our model to regain competitiveness. And you can be sure we will do whatever we have to do.”
Hammond himself was on the ‘Remain’ side in the Brexit debate – but these comments imply he is willing to commit wholeheartedly to the mandate delivered at the June referendum. Like many other ‘Remainers’ Hammond will ultimately hope that May can work out a new free trade deal with the U.K.’s most powerful trade partner. As the interview continued, he said:
“Most of us who had voted remain would like the U.K. to remain a recognizably European-style economy with European-style taxation systems. I personally hope we will be able to remain in the mainstream of European economic and social thinking. But if we are forced to be something different, then we will have to become something different.”
Labour’s Corbyn, speaking to Andrew Marr on the BBC, warned that Hammond appeared to be telling Europe: “if you don’t give us exactly what we want, we’re going to become this sort of strange entity on the shores of Europe, where there will be very low levels of corporate taxation designed to undermine the effectiveness or otherwise of industry across Europe.”
Meanwhile, U.K. newspaper The Guardian has reported that the Netherlands will block any EU trade deal with the U.K. unless it signs up to stringent tax-avoidance regulations in an effort to stop a “race to the bottom for profits taxation.”
The opinions in this article do not reflect those of Dominion Fund Management Limited, and in the instance of any forward-looking statements, these should not be construed as advice.
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