UK's Hammond says economy should be priority in Brexit talks
19 June, 2017, 00:56 | Author: Valerie Burke
But softer Brexit options have been worked out and are ready to be negotiated if London changes its mind later this year, according to a senior European Union official.
The issue most likely to torpedo negotiations is Britain's bill for leaving the bloc.
May has clung on to power but has so far failed to conclude an agreement with Northern Ireland's ultra-conservative Democratic Unionist Party that would bolster her ability to govern.
One European diplomat in London said the political upheaval was such that it was hard to know what to write back to his capital, pouring scorn on May's campaign slogan of "strong and stable leadership".
Mr Hammond said the United Kingdom would definitely be leaving both the EU single market and the customs union, but said that a transitional deal to enable a smooth exit from both was highly desierable.
It's the first time a country has left the European Union so the negotiators led by former French government minister and European Union commissioner Michel Barnier and Britain's David Davis will also be navigating uncharted waters.
The chancellor of the exchequer was asked whether he favored a softer version of Brexit - such as British membership of the EU single market or of a customs union.
They come after Theresa May lost her Commons majority as she sought a clear mandate from voters to strengthen her hand for the negotiations.
With May still hammering out the details of a post-election deal to stay in power with the support of a small Northern Irish party, there are fears of a disorderly exit that would weaken the West, imperil Britain's $2.5 trillion economy and undermine London's position as the only financial centre to rival NY.
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Scottish Conservative leader Ruth Davidson, who is newly influential after winning a crucial 13 seats in Scotland, has said Britain should prioritise "freedom to trade and our economic growth". While they may agree to leave the customs union, they back a policy of "comprehensive free trade and customs agreement" with the European Union.
The UK has agreed to sort out its European Union "divorce bill" and citizens' residence rights before starting Brexit trade talks, European Union sources have told the BBC.
The arch-federalist former Belgian PM, who this year published a book calling on EU states to forge "a more flawless Union", warned last week Britain could lose its rebate and opt-outs if it changes its mind and decides to stay.
But Hammond said transitional arrangements would be necessary, to give business greater certainty.
And the source told the BBC that it was understood the talks would broadly follow the EU's preferred sequence, dealing with issues of citizens' rights and a framework for calculating outstanding financial liabilities before moving on, possibly later in the year, to deal with the UK's future relationship with the EU.
The Commission said: "The opening of negotiations at political level next week will focus on issues related to citizens' rights, the financial settlement, the Northern Irish border and other separation issues, as part of the sequenced approach to the talks".
"We will build the broadest possible consensus for our Brexit plans and that means giving parliament the maximum amount of time to scrutinise these bills by holding a two-year session of parliament", the government said in a statement. "She has had to tear up most of her manifesto", he said.
Foster later said it was "right and proper" for the DUP to support May's legislative program, which is due to be announced next week and will be the first formal test of her ability to govern.
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