Philip Hammond has said he is “confident” businesses will be given the Brexit certainty they need although he sidestepped calls to ensure transition principles are guaranteed by Christmas.
The UK Chancellor acknowledged the principles of a transition period are “urgent and pressing”, also telling MPs the Government wants them agreed with the European Union “as soon as possible”.
Labour’s John McDonnell urged Mr Hammond to “face down” his opponents in Cabinet and state he will not support or vote for a no deal Brexit.
The shadow chancellor also challenged his counterpart to “stand up to the reckless Brexiteers” in the Conservatives and reassure businesses that the principles of any transition will be confirmed by the end of the year.
Mr Hammond’s comments came after Theresa May told MPs there could be no transition period after Britain leaves the EU unless there was agreement on a trade deal.
In a Commons statement on Monday, the Prime Minister said she remained confident that a deal was possible following the latest EU summit last week in Brussels.
Speaking during Treasury questions, Mr McDonnell said Mr Hammond’s earlier responses to MPs over the prospect of a deal had been crushingly disappointing and that expressions of hope over an agreement were not good enough.
He said: “The Chancellor knows the economic perils our country faces if there’s no deal. He described it rightfully as a worst-case scenario.
“Can I urge him, in the interests of our country, to have the courage of his convictions, stand up and face down his opponents in Cabinet and confirm today that like us he will not support or vote for a no deal Brexit.”
Mr Hammond said the UK’s clear objective and priority is to achieve a deal with the EU, adding: “Our preference would be for a deal that gives a comprehensive trade, investment and security partnership between the UK and the European Union in the future.
“As part of such a deal, we will seek an implementation phase that gives British businesses and indeed Government agencies proper time to prepare for the new circumstances they will face.”
Mr McDonnell said: “If he cannot stand up to his opponents on a no deal Brexit, can he at least stand up to them on the issue of the transition period?”
The Labour frontbencher said business leaders had made clear “they need the certainty now” and he accused the PM of having sowed more confusion over the transition period.
Mr McDonnell went on: “Businesses cannot wait, they need to plan now. Jobs are in jeopardy now.
“If the Prime Minister is not willing to stand up to the reckless Brexiteers in her party, will the Chancellor?
“Will the Chancellor make it clear in the way the Prime Minister failed to do yesterday and, as business leaders have been calling for, we need the principles of any transition confirmed by the end of this year?”
Mr Hammond replied: “You are correct to say this matter is urgent and pressing and that’s why we were so pleased that last week at the European Council the 27 agreed to start internal preparatory discussions in relation to an implementation period.
“I am confident we will be able to give businesses the confidence and certainty they need.”
Earlier in Treasury questions, Mr Hammond reiterated the Government’s desire to agree a transition period.
He added: “And we want to agree the principles of that period as soon as possible.”
Tory Charlie Elphicke (Dover) urged Mr Hammond to reject Mr McDonnell’s comments, adding: “You cannot agree a price until you know what you’re paying for. Only a fool would write out a blank cheque of taxpayers’ money.”
Tory former minister Anna Soubry said: “The Chancellor, in his efforts to secure a good Brexit deal and a transition period, has the confidence and support not only of (MPs) on this side of the House but across the whole of British business…”
The pro-EU MP accused Labour of inspiring “fear through their Marxist mayhem” before pressing the need for a transition period.
Mr Hammond, in his reply, said: “British business has made clear it wants the earliest possible certainty about the implementation arrangements, and it’s also made very clear that it doesn’t want any Marxist mayhem.”
The Chancellor was also asked by SNP economy spokeswoman Kirsty Blackman about research that suggested 56% of EU nationals in FTSE 250 companies were likely to leave the UK before the conclusion of Brexit negotiations.
“I’m very confident that, whatever the outcome, all of this talent will not leave,” Mr Hammond said.
“The Prime Minister made very clear yesterday that her top priority remains giving assurance to EU citizens living in the UK, and that is why she is working hard to deliver a deal on citizens.
“It is the area in which our discussions with the European Union are most advanced, and she has the Prime Minister’s personal commitment of the importance she attaches to that area.”