Britain will seek to ease its way out of the European Union in order to prevent severe damage to its economy.
Treasury chief Philip Hammond said Friday that Britain hopes to negotiate a “transitional period” of up to three years after leaving the European Union in March 2019, during which current terms of trade would be maintained.
“There is going to have to be a period during which we move gradually from where we are now to our new long-term relationship with the European Union,” Hammond told the BBC.
Hammond said the transitional period, which must end before the next general election due in 2022, is needed to protect the British economy from the shock that a clean break with the EU would bring.
“The government’s job is to make sure that our economy can go on functioning normally … to protect jobs, to protect British prosperity,” he said.
The plan outlined by Hammond reflects a dramatic shift in the government’s thinking after Prime Minister Theresa May lost her parliamentary majority in an election in June.
May had been advocating a clean break with the EU starting in March 2019, and had even threatened to walk away from exit talks without striking a new trade deal under the mantra that “no deal is better than a bad deal.”
But the government has moderated its position in key ways since the surprise election setback. Businesses have been pushing hard for an arrangement that allows them time to get used to the new relationship with the U.K.’s biggest export market.
Hammond said Friday that if the EU agrees the transitional period, very little might change in the immediate aftermath of Brexit.
“I would hope that we would agree a transition which means that in the immediate aftermath of leaving the European Union, goods would continue to flow across the border between the U.K. and the EU in much the same way they do now,” Hammond said.
The shift coincides with a barrage of disappointing reports have sparked worries that Britain’s already weak economy may be drifting toward recession. The U.K. recorded the slowest growth of any European economy in the first three months of the year, and output remained weak in the second quarter.
Brits are saving the smallest share of disposable income in over 50 years. Credit card borrowing is at record high. Wages are stagnating and consumer confidence is crashing.