David Davis to calm Euro-sceptic fears after Philip Hammond hints at 'soft Brexit'

26 January 2018, 03:40

David Davis will attempt to calm Eurosceptic Tory MPs' fears of a "soft Brexit" after Chancellor Philip Hammond said leaving the EU would mean only "very modest" changes.

In an upbeat speech on trade, the Brexit Secretary will claim the UK will be able to negotiate deals as soon as it leaves the EU, even though it will still follow many of Brussels' rules.

But his speech comes after leading backbench Brexit cheerleader Jacob Rees-Mogg claimed close alignment with the EU after Brexit would prevent "meaningful" trade deals.

Amid a febrile atmosphere among Tory MPs at Westminster, the latest Brexit feuding will make Theresa May’s position increasingly perilous as more backbenchers are urged to join a mutiny against her.

Speaking at the World Economic Forum in Davos, the Chancellor incensed hardline Brexiteers by saying he wanted the "closest possible relationship between the EU and UK post-Brexit".

On Britain's future trade he added: "We are taking two completely interconnected and aligned economies with high levels of trade and selectively moving them, hopefully very modestly, apart."

But in a speech in Middlesbrough, Mr Davis will spell out the Government's aims for an "implementation period" after Brexit in March 2019 during which the UK will effectively follow the regulations of the single market and customs union.

Mr Davis is expected to say the United Kingdom will have its own trading policy, and can sign new deals with old friends and new allies.

He will add: "The UK’s fastest growing export markets between 2005 and 2014 included countries like China and Brazil. And we will be able to do so much more with them, when we are an independent trading nation, outside of the EU.

"Of course maintaining access to each other's markets on current terms means we will replicate the effects of the EU customs union during the implementation period.

"But participating in a customs union should not preclude us from formally negotiating — or indeed signing — trade agreements. Although, of course, they would not enter into force until the implementation period has ended."

Reacting to Mr Davis’s speech, Labour’s Shadow Brexit Secretary Sir Keir Starmer said: "The Government has got to stop the double-speak and be clear about exactly what it wants to achieve from a transitional deal with the European Union.

"This issue should have been resolved months ago. However, the Government are fundamentally split on this issue, with many in Theresa May’s party wanting to rip the UK out of Europe at any cost.

"Ministers should put the national interest first and guarantee a deal that will protect jobs and the economy."

Earlier, Mr Hammond’s Davos prediction of "very modest" changes provoked not only an angry backlash from Euro-sceptic Conservative MPs but also a slap down from the Prime Minister.

"The Government's policy is that we are leaving the Single Market and the Customs Union," said a Downing Street source. "Whilst we want a deep and special economic partnership with the EU after we leave, these could not be described as very modest changes."

That prompted Mr Hammond to attempt to clarify his comments on Twitter, claiming: "I said in #Davos that gov wants to minimise any reduction in access to EU market post Brexit.

"And it's a fact our economies are integrated, that's the baseline from which we leave the single market and customs union - which clearly represents change.

"For anyone concerned - I was clear earlier in same speech at #Davos U.K. will cease to be member of EU on 29 March 2019, and after we will be outside Customs Union and the Single Market."

But backbencher Andrew Percy tweeted: "Oh put a sock in it Phil. Getting a bit sick of 'Freelancing Phil' mocking other Cabinet Ministers and writing his own Brexit policy.

"Brexit means nothing if we don't end free movement rules and take the power to diverge if we judge it in our interests."

Earlier this week, Mr Rees-Mogg, new chairman of the European Research Group of hardline pro-Brexit Tory MPs, clashed with Mr Davis in a Commons committee and claimed the transition period would leave the UK a "vassal state".

And repeating his "vassal state" in a speech in Petersfield, Hampshire, Mr Rees-Mogg declared that the Government's tone on Brexit needed to fundamentally change

"If [Brexit's opportunities are] taken off the table then Brexit becomes only a damage limitation exercise," he said. "The British people did not vote for that. They voted for hope and opportunity and politicians must now deliver it."

He added that there are "obvious benefits" which were at risk, and negotiations were sounding as though the UK would be a "rule taker like Norway".

He said: "No sensible nation would negotiate with the UK for a marginal gain when we would merely be a vassal of the EU."