Chancellor of the Exchequer Hammond says Britain needs to be prepared for 'bad-tempered' Brexit

British Chancellor of the Exchequer Philip Hammond says a "no deal" Brexit could still involve agreements in some areas.
British Chancellor of the Exchequer Philip Hammond says a "no deal" Brexit could still involve agreements in some areas.PHOTO: AFP/PRU

LONDON (Bloomberg) - British Chancellor of the Exchequer Philip Hammond said he will start releasing more money to help the government prepare for a "no deal" Brexit if there are no clear signs of progress in talks with the European Union by early 2018.

"There will be some areas where we need to start spending money in the new year if we can't tell ourselves we're moving steadily and pretty assuredly towards a transition agreement," Mr Hammond told Parliament's Treasury committee on Wednesday (Oct 11).

He earlier pushed back at the suggestion that he should release cash now: "Some are urging me to spend money to show the EU we mean business. I think the EU know we mean business."

The chancellor started the session by saying that while it was "theoretically conceivable" that talks might break down so badly that planes were unable to take off because of a lack of agreement on air traffic control, that wasn't a scenario anyone "seriously believes".

He was explaining that a "no deal" scenario could still involve agreements in some areas.

But he went on to say that the government needed to prepare for "the possibility of a bad-tempered breakdown in negotiations where we have non-cooperation and the worst case scenario, even a situation where people are not necessarily acting in their own economic interests".

It was possible, he said, that this could mean data was unable to legally move between Britain and the EU.

Britain is due to leave the EU in March 2019, with or without a deal. Talks are making scant progress and the EU side has still to decide whether to allow negotiations to include the two-year transition period that Britain wants to put in place after the split.