Philip Hammond urges government to seek an ‘interim’ Brexit trade deal to avoid ‘second shock’ to UK economy

Hammond appeared in front of a select treasury committee to answer questions over the economic consequences of the coronavirus.

When asked by SNP MP Alison Thewliss for his thoughts on the financial costs of a No-Deal Brexit, Hammond said: ‘My observations would be that at the second half of this year, the UK economy is going to be recovering from an extremely painful economic shock… to place ourselves at a disadvantage to then have a second shock later this year would not be helpful.’

He said the UK faces ‘real’ challenges over allocating enough resources to negotiations and suggested the breakdown of international travel would also impact on talks.

‘I do wonder whether if it were possible for the government to agree to at least a temporary trade deal with the EU which is perhaps not satisfactory to them in the long term but will allow us at least more time to negotiate the full scale trade deal.’

‘There has to be a way to avoiding an additional challenge for the recovering UK economy later this year,’ he added.

The Tory politician was then asked if the UK has enough ‘capacity’ to solidify a deal by December 31.

He said: ‘I don’t think it’s just the UK… Governments across Europe are in the same place.

‘This is not the ideal environment to be trying to reach a long term deal that will shape the relationship between the UK and its closest trading partner for decades to come.

‘I would urge the government to think about some kind of trade deal which avoids a second shock to the economy this year.’