Cracks appear in the British Cabinet as PM Theresa May seeks to negotiate EU Brexit deal

Britain's Prime Minister Theresa May sits in on a teacher training session on mental health support, at the Orchard School in Bristol on June 27, 2017.
Britain's Prime Minister Theresa May sits in on a teacher training session on mental health support, at the Orchard School in Bristol on June 27, 2017. PHOTO: AFP

LONDON (BLOOMBERG, AFP) - Prime Minister Theresa May's office has tried to downplay a row between her most senior officials over whether Britain should have a transition period as it leaves the European Union, as tensions over Brexit policy emerged.

Brexit Secretary David Davis accused Chancellor of the Exchequer Philip Hammond of taking inconsistent positions on whether Britain should seek a bridging deal, which could mean remaining in the customs union for years after Britain's due to quit.

Eurosceptic Davis insisted Britain was likely to quit the customs union on the first day of Brexit in March 2019. But speaking in Germany on Monday, Hammond restated his view that a lengthier transition period would be required to help businesses avoid a cliff-edge shift in their trading arrangements.

Speaking at a conference organised by The Times of London on Monday, Davis described Hammond's record of comments on the potential timescale for Brexit as "not quite consistent with one another."

"What he's actually said, the most important thing is it's got to be done before the election so that's a maximum of three years," Davis added, insisting the two ministers were "entirely aligned" in their thinking on the length of any transition.

May's spokeswoman Alison Donnelly was asked to explain which minister was correctly stating the government's policy. She told reporters in London that Britain will be leaving the customs union but the details of any transition period would be decided in the negotiation with the EU.

Meanwhile, the British government on Tuesday said it was forming an advisory group, reportedly made up of the country's main business lobby organisations, as it negotiates its exit.

Business Secretary Greg Clark said "the government is creating a new EU exit business advisory group to ensure business is not only heard but is influential throughout the negotiations".

Reports said the advisory group would be made up of five bodies: the Confederation of Business Industry, manufacturers' grouping the EEF, the British Chambers of Commerce, the Institute of Directors and the Federation of Small Businesses.

"Since the referendum I've held discussions with businesses, workers and local leaders across the UK and investors all around the world," Clark added in his statement.

"These will continue over the coming months, including my weekly meetings with the director generals of the five main business organisations."

British business leaders have for months urged the government to rule out a hard break with the EU that would see Britain's departure from the single market or tariff-free zone, while also ending the free movement of people.

They have argued also that uncertainty over the terms of Brexit was impacting investment decisions - and warned against a situation where Britain leaves the EU single market without having a new trade deal in place that would mean reverting to trading under World Trade Organization rules.