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Timetable for Brexit Talks Called 'Political Necessity' -- WSJ

21 Jan 2017 7:32 am
By Jason Douglas 

Britain is aiming to wrap up exit talks with the European Union within two years as a "political necessity," U.K. Treasury chief, Philip Hammond, said Friday, rebutting concerns from some European governments that negotiations can't be concluded so quickly.

Mr. Hammond said exiting the bloc by 2019 was both possible and a requirement of EU conventions.

"The treaties are clear: we will leave the EU two years after we serve the notice," the Chancellor of the Exchequer said at a panel discussion hosted by The Wall Street Journal at the World Economic Forum in Davos, Switzerland.

Speaking on the same panel, Mario Monti, formerly prime minister of Italy and a senior EU official, agreed that a two-year deadline was achievable and advocated an "orderly" exit process.

U.K. Prime Minister Theresa May has said she will kick off talks before the end of March.

On Tuesday, she said the U.K. intended to leave the EU's single market and would seek a new free-trade agreement with the bloc to allow the U.K. to continue selling goods and services easily to EU member states.

She signaled Britain's desire to continue cooperating with the EU on issues including security and scientific research, while extricating the U.K. from the jurisdiction of European courts and ending the automatic right of EU citizens to settle in Britain.

Mr. Hammond acknowledged Friday that reaching agreement on these and other issues within two years would be challenging. He stressed the likely need for a phased implementation of the new relationship between the U.K. and EU.

"We are going to have to have a practical discussion about how we manage that transition," he said. He added the U.K. will continue to welcome skilled workers from Europe and beyond but that freedom of movement for unskilled labor must end.

"The political debate in the U.K. about migration is not about computer scientists and academics and brain surgeons. It's about the other end of the economic spectrum."

Another key question in the negotiations will be the future of the U.K.'s giant financial sector and its continued access to European markets. Some banks have already signaled their intention to move some staff out of London.

However, Jes Staley, chief executive of Barclays PLC, said he thought London would preserve its status as a financial hub after Brexit.

"It's not going to be determined by one bank CEO saying 'we're going to move a thousand people here, a thousand people there,'" he said at the panel discussion.

The U.K. economy has held up well since the public voted to leave the EU in June, growing by around 2% in 2016, according to International Monetary Fund forecasts.

But many economists, including officials at the Bank of England, expect the economy to slow in 2017 as the weak pound boosts inflation, which may eat into consumers' spending power.

Mr. Hammond said Friday the U.K. would need to rethink how the economy maintained its competitiveness if it lost easy access to European markets. This followed remarks from Mrs. May interpreted by some European politicians as a threat to slash corporate taxes.

"If we were to be, by some catastrophe, closed off from these markets, we would have to reinvent ourselves," Mr. Hammond said.

Asked about the future of the EU more broadly, Mr. Monti said he believes it is likely and desirable that the bloc will reform, with some countries choosing closer economic and political integration and other opting for looser ties. Calls for reform have intensified in response as populist candidates hostile to the EU appear poised for gains in elections across the bloc this year.

"I see nothing wrong with a two-speed Europe, or a three-speed Europe," he said, though he added he thinks free movement of people will remain a central principle.

Write to Jason Douglas at jason.douglas@wsj.com

(END) Dow Jones Newswires

January 21, 2017 02:32 ET (07:32 GMT)

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