The UK’s economic model will remain “recognisably European” after Brexit, according to the Chancellor.
Philip Hammond told the French newspaper Le Monde that the UK will not become an aggressive Singapore-style corporate tax haven by slashing corporation tax and cutting regulations for business.
In an interview published over the weekend, he told the paper: “I often hear it said that the UK is considering participating in unfair competition in regulation and tax. That is neither our plan nor our vision for the future.”
“The amount of tax we raise as a percentage of our GDP puts us right in the middle of the pack. We don’t want to change even after we’ve left the EU.
Image: Philip Hammond and Liam Fox appear to be at odds over freedom of movement
“I would expect us to remain a country with a social, economic and cultural model that is recognisably European.”
The Chancellor is tempering his stance from earlier in the year. Indeed he can attribute some of the suggestions that the UK’s might become a tax-haven to himself.
In an interview for German Newspaper Welt am Sonntag in January, he said that with the UK would like to remain a European style economy but added: “If we are forced to become something different then we will have to become something different.”
He clarified: “We could be forced to change our economic model, and we will have to change our model to regain competitiveness.”
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At the time the comments were considered unhelpful by EU negotiators.
This latest interview seems to be a softening of the Chancellor’s language, in the same way that the Government seems to have stopped saying that “no deal is better than a bad deal.”
But all this comes amid tensions in the Cabinet while the Prime Minister is on holiday.
Last week Mr Hammond signalled the UK’s desire for an extended post-Brexit transition period under which free movement would continue for a further three years.
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However, International Trade Secretary Liam Fox insisted unregulated free movement of labour after Brexit would “not keep faith” with the EU referendum result and the Cabinet had not agreed a stance on immigration.
Dr Fox said he had not been involved in any discussions on migrant transitional arrangements.
Former Brexit minister David Jones said Dr Fox and Boris Johnson, both out of the country when Mr Hammond announced the transition plans, were “clearly being kept out of the loop”.
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Mr Johnson was even forced to deny suggestions he was set to quit the Cabinet over the Brexit rift.
It was Liberal Democrat leader Sir Vince Cable who referred to rumours of the Foreign Secretary’s resignation.
A spokesman for Mr Johnson said: “Vince Cable is making this stuff up and maybe he should take more time to think up some policies rather than wasting his time on peddling lies.”