Business » Finance

UK Treasury Chief Issues Stiff No-Deal Brexit Warning

by Danica Kirka .
Thursday Jun 20, 2019
Anti-Brexit remain supporters stand with European flags and pro-Brexit leave supporters hold red placards as they all protest outside the Houses of Parliament in London, Wednesday, June 19, 2019
Anti-Brexit remain supporters stand with European flags and pro-Brexit leave supporters hold red placards as they all protest outside the Houses of Parliament in London, Wednesday, June 19, 2019  (Source:AP Photo/Matt Dunham)

Britain's Treasury chief is urging Conservative Party leadership contenders to be honest with the public and spell out what they would do if their plans for leaving the European Union falter.

Philip Hammond is expected to use his Mansion House showcase speech in the City of London on Thursday to say the candidates should outline what their Plan B might be if Parliament rejects both the Brexit deal negotiated by outgoing Prime Minister Theresa May as well as taking on Brexit with no deal at all.

He plans to urge candidates to offer realistic strategies for taking the economy out of a "holding pattern" in which it has been stuck as May sought to get the deal through the House of Commons — possibly even if it means another referendum on leaving the EU.

"We cannot allow ourselves to be forced to choose between our democracy and our prosperity," Hammond's excerpts said. "If the new prime minister cannot end the deadlock in Parliament, then he will have to explore other democratic mechanisms to break the impasse."

Hammond repeated warnings that leaving the EU without a deal would damage the British economy and ultimately risk the breakup of the United Kingdom. He also stressed that the 26.6 billion pounds of "fiscal headroom" set aside by the Treasury would be soaked up by a no-deal Brexit.

The comments are seen as a rebuke to Boris Johnson, the front-runner in the race to be the next leader of the Conservative Party and therefore the next British prime minister. Johnson is arguing that the contingency fund set up to cushion the British economy in the event of "no deal" could be used for tax cuts.

"A damaging 'no deal' Brexit, which would cause short-term disruption to our economy, soaking up all the fiscal headroom we have built, and more," he said. "So there is a choice: Either we leave with no deal or we preserve our future fiscal space - we cannot do both."

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