In a shock announcement the Chancellor has said there will be no alignment with EU regulations once Britain has officially left the bloc. He warned the Treasury would not lend support to manufacturers that favour EU rules as the sector have had three years to prepare for Britain’s transition. Mr Javid said Britain would not be bound by the rules of the customs union or the single market come the end of the year – when the EU transition period comes to an end.
The Chancellor told the Financial Times: “There will not be alignment, we will not be a rule-taker, we will not be in the single market and we will not be in the customs union – and we will do this by the end of the year.
“We’re… talking about companies that have known since 2016 that we are leaving the EU.
”However, there is concern from some UK business sectors about leaving the current trading partnership without a new deal to reduce border friction.”
Mr Javid admitted that some businesses may not benefit from Brexit, but added that the UK economy would ultimately continue to thrive in the long-term.
He said: “Once we’ve got this agreement in place with our European friends, we will continue to be one of the most successful economies on Earth.”
But the comments haven’t been welcome by everyone as they are in stark contrast to Theresa May’s Brexit deal in which she envisaged close alignment with the EU, in an effort to reduce friction at the border for traders.
The Food and Drink Federation said it sounded like the “death knell” for frictionless trade with the EU and was likely to cause food prices to rise.
Tim Rycroft, chief operating officer of the Food and Drink Federation, told BBC Radio 4’s Today programme that “it sounds awfully like the death knell for the concept of frictionless trade with the EU”.
Carolyn Fairbairn, CBI director-general, said for many companies, “particularly in some of the most deprived regions of the UK”, keeping the same rules would support jobs and maintain competitiveness.
The Chancellor will have the opportunity to sell his vision for Britain’s economy post-Brexit when he travels to Davos next week for the World Economic Forum.
The terms of the post-Brexit trade deal are set to be reached, as the Government will enter into talks with the EU after the UK leaves the bloc on January 31.
While the two sides discuss their future trading relationship, the UK will continue to follow EU rules and contribute to its budget – for the entirety of the 11-month transition period.
EU chiefs, including European Commission President Ursula von der Leyen has warned that 11 months is not enough time to agree a comprehensive trade deal.
But Boris Johnson has remained steadfast in his pledge to not extend the negotiating period, and even included a clause in the Withdrawal Agreement Bill that the transition period will not be extended.