Britain's Chancellor of the Exchequer Sajid Javid 20191126
UK Chancellor of the Exchequer Sajid Javid signalled Britain is planning to shift its economy further away from the European Union’s. Image Credit: Reuters

London: UK Chancellor of the Exchequer Sajid Javid signalled Britain is planning to shift its economy further away from the European Union’s, firing an early salvo in what’s set to be a fractious year in hammering out their future relationship.

“There will not be alignment, we will not be a ruletaker, 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,” Javid said in an interview with the Financial Times.

Javid’s comments, coupled with a report in the Daily Telegraph that Prime Minister Boris Johnson is planning to formally open trade talks with the US as soon as next month, suggest Britain is seeking to put early pressure on the EU’s trade team even before the UK officially quits the bloc on January 31.

The UK government is speeding up plans for trade negotiations with the US, the Telegraph reported, with civil servants preparing advice for ministers and Johnson poised to seek authorisation from the cabinet to start talks with the US next month possibly during a trip to Washington.

Any move to start negotiations with the US before trade talks with the EU get fully under way could send a strong message to the EU that Britain wants to break free of European regulations. It could also further complicate discussions with Brussels.

Talks with the EU already face a daunting schedule this year, with the EU probably agreeing on its formal negotiating mandate only in late February and the official transition period expiring on December 31. Johnson says that deadline is immovable, while EU Chief Negotiator Michel Barnier calls it “extremely challenging.”

German Chancellor Angela Merkel has warned that the further the UK goes it alone, the more it will be regarded in Brussels as a direct competitor.

The debate over how much Britain will diverge from the EU with regard to regulatory standards is set to form a key plank for how the talks progress — a no-deal Brexit could create border delays and increase costs for carmakers and other manufacturers.

“There will be an impact on business one way or the other, some will benefit, some won’t,” Javid said in the Financial Times interview, urging companies to adjust their strategies accordingly. He plans to back more projects in regions outside London and the southeast, and pump more funds into training the country’s workforce.

The government must do more to spell out how the UK intends to diverge from the EU, according to Claire Walker, co-executive director of the British Chambers of Commerce.

“Uncertainty around the extent of divergence risks firms moving their production elsewhere,” Walker said. “The government must clearly communicate these changes in a timely way and provide substantial support to help firms adapt.”

As for the UK’s finances, Javid said he wants to bolster growth rates to between 2.7 per cent and 2.8 per cent a year. Improving productivity, which has been a brake on the economy for several years, is also an issue he’s seeking to address, he told the FT.

Labour’s John McDonnell said on Twitter that trade will be harmed, putting jobs at risk.

“Fears now made real about food price increases and threats to jobs in motor industry and manufacturing. Right Ideology overriding common sense,” McDonnell said in response to Javid’s comments.