Chancellor Hammond gave the Treasury select committee this afternoon when asked if Britain could stick to the two-year Article 50 timeline that would see the country leave the EU in March 2019 with no transitional deal.
That was the first admission by any senior minister in Prime Minister Theresa May’s government that Brexit is going to be harder, take longer, and cost more than previously thought.
Adding infrastructure, staff, and a regulatory framework to create new customs procedures at British ports alone will add hundreds of millions of pounds to the cost of operating the customs services, he said.
The admission took Downing Street by surprise, according to the Financial Times: A spokesman for Theresa May said no decisions have been taken but added that the prime minister had previously expressed a desire to avoid a Brexit cliff-edge.
Hammond told the committee: There is I think an emerging view among businesses, among regulators, among thoughtful politicians, as well as a universal view among civil servants on both sides of the English channel that having a longer period to manage the adjustment between where we are now as full members of the EU and where we get to in the future as a result of negotiations would be generally helpful.
He also said: An adjustment period would run fewer risks of disruption, including risks to financial stability. We want transition arrangements to be discussed early in the negotiating process.
There could be quite significant physical infrastructure changes that need to be made at ports of entry and exit not only in the UK, but in continental Europe as well, Mr Hammond told the committee.
“There might be a need to train large numbers of people in anticipation of more intensive procedures at borders.
“It is true that in certain conceivable outcomes, there would be a very substantial increase in the numbers of customs submissions and customs inspections. We are talking about – in EU trade – perhaps five times as many submissions and inspections being required.
It is, perhaps, not a surprise that Brexit is going to be complicated and will take a long time. CETA, the Canadian free trade agreement, took seven years to negotiate. While May’s government remains committed to Brexit, today’s testimony is the first sign that the logistical reality of Brexit is starting to sink in, at Westminster.
Leaving the EU requires negotiations between 28 countries on trade in myriad industries. As former cabinet secretary Gus O’Donnell said of the only country Greenland that has ever left the EU: Greenland has a smaller population than Croydon and it has one issue, and that’s fish. Still took three years to exit EU.