Sajid Javid warns businesses that it will get worse before it gets better

Sajid Javid has admitted businesses will be hit hard by Brexit and warned manufacturers that there would be no alignment with EU regulations once Britain’s exit from the European Union was made official.

With less than two weeks until the Brexit deadline, the chancellor said the Treasury would not support manufacturers that favour EU rules as firms have had three years to prepare for a new trading relationship.

In an interview with the Financial Times, he said: “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."

The Confederation of British Industry (CBI) said it welcomed the chancellor's "ambitious" vision but said government should not feel it is obliged to depart from EU rules.

Carolyn Fairbairn, CBI director-general, said that many companies, particularly in some of the most deprived regions of the UK would be better off keeping the same rules as this would support jobs and maintain competitiveness.

The Food and Drink Federation are very sceptical about the move, saying it sounded like the "death knell" for frictionless trade with the EU and was likely to cause food prices to rise.

Mr Javid declined to specify which EU rules he wanted to drop.

The automotive, food and drink and pharmaceutical industries all warned the government last year that moving away from key EU rules would be detrimental.

Last week the European commission president, Ursula von der Leyen, also warned that the price of non-alignment would cause friction in trade. “The more divergence there is, the more distant the partnership has to be,” she said.

Michel Barnier, the EU’s chief negotiator has also confirmed that the UK will not get a tariff-free, quota-free trade deal with the EU unless it accepts level-playing field rules on issues such as the environment.

Javid admitted that some businesses may not benefit from Brexit, but added that the UK economy would thrive in the long term. Negotiations on the future relationship are expected to begin formally after 25 February when the EU has formally agreed its negotiating goals.

In November, the Bank of England said a weaker global economy and its new assumptions about Brexit would knock 1% off UK growth over the next three years compared with its previous August forecast.

Javid was upbeat about the economy, saying he hopes to boost growth rates between 2.7% and 2.8% a year. However, in an interview last week, Carney reiterated that Britain’s trend growth rate was much lower at between 1% and 1.5% .

#chancellor #SajidJavid #Brexit #BankofEngland #Carney #MichelBarnier