Brexit: Hammond rejects business calls for customs union

Philip Hammond has told business chiefs their Brexit fears can be resolved without staying in the customs union.

The chancellor rejected claims by the CBI president that continued membership was a "plan A" option "already out there" to minimise disruption to trade.

While the UK's post-Brexit customs options were "works in progress", he was sure a solution would be found.

Meanwhile, Boris Johnson has insisted the UK should leave the customs union "as fast as is reasonably possible".

Speaking on a trip to Argentina, the foreign secretary said the UK should establish its own trade policy outside existing customs arrangements "with all convenient speed".

The UK is leaving the EU in March 2019, which will be followed by a temporary transition phase until the end of 2020.

Most Brexiteers are against Theresa May's preferred option of a "customs partnership", under which the UK would collect tariffs set by the EU customs union on goods coming into the UK.

The alternative proposal would rely on technology and advance checks to minimise, rather than remove, customs checks. The EU has expressed doubts about whether either option would work.

Speaking at the employers' group's annual dinner, outgoing CBI president Paul Drechsler said the lack of political progress on the two proposals was a "hand-brake on our economy that can and must be released".

He urged ministers to be more pragmatic, telling Mr Hammond "there is already a solution out there that is our plan A, to choose to stay in a customs union with the EU, unless and until a better alternative can be found".

Mr Hammond said the government shared the CBI's desire to "minimise frictions and burdens, to avoid new barriers in Ireland and to grow British exports".

"But we do not agree that staying in the customs union is necessary to deliver them," he said.

Building on the two models under consideration, he said ministers were "confident we can develop a solution that will allow us to move forward while meeting your concerns".

Mr Johnson told Bloomberg that the UK needed to have its own trade and commercial policy, including its ability to set its own tariffs on goods from the rest of the world.

"The PM is the custodian of the plan which is to come out of the customs union, out of the single market and to get on with that project with all convenient speed," he said.

"That is what we're going to do. And what people like Argentina, Peru, Chile, outward looking free trading countries, what they want to hear from us is that we're getting on with it, with confidence and brio and zap and dynamism."

The UK has drawn up a "backstop" proposal in case customs arrangements have not been agreed by then, which would keep the UK aligned with the EU's customs union for a limited period.

Theresa May has insisted the plan, designed to avoid a hard border in Northern Ireland if the new arrangements are not ready in time. would only apply "in a very limited set of circumstances".

Mr Johnson, who is due to head to Chile on Wednesday on the final leg of his tour of South America, also suggested he would like to have a "Brexit plane" to help him travel the world and promote the government's vision of Global Britain.

While acknowledging that taxpayers would baulk at the cost of buying a jet for ministers, he said he thought the spending would be justified if it was not "exorbitant".