Philip Hammond 'wants UK to keep full single market access in transitional Brexit deal'

Philip Hammond wants Britain to maintain full access to the European single market and customs union in the first of a two-part transitional deal after Brexit, according to reports.

The Chancellor is said to have told business leaders he initially wants an "off-the-shelf" deal with the EU that would maintain the UK's current trading relationship with the bloc.

According to reports in the Financial Times (FT), this would be followed by a second "implementation" phase while the final terms of a future trade deal were negotiated.

On Wednesday, the Chancellor told ITV News on Wednesday that he hopes talks on a transitional deal with the EU can begin in the autumn.

And in other comments, Mr Hammond predicted that any transitional deal would be completed within three years of the UK leaving the bloc.

But he warned that "many things will look similar" on the first day after Britain's departure in March 2019.

Allies of Mr Hammond told the FT the transition and implementation periods should end by 2022.

Mr Hammond has been an advocate of transitional arrangements between Britain's exit from the EU in 2019 and any new trade deal coming into force, an approach that has caused tensions with senior pro-Brexit MPs in the government.

Sources present at a meeting with Mr Hammond and business leaders at Number 11 Downing Street on Monday told the FT the Chancellor was clear there was not enough time to negotiate a new bespoke trade deal before Britain's exit in April 2019.

"He was very clear these were two different phases," someone at the meeting told the newspaper.

Meanwhile, Labour welcomed the pull towards a transitional deal.

Shadow Brexit secretary Sir Keir Starmer said: "Labour has been calling on the Government to commit to appropriate transitional arrangements for a long time.

"If jobs and the economy are to come first, there can be no threat of a cliff-edge for businesses after we leave the European Union."

He added: "The Chancellor now appears to accept this. However, in light of the clear divisions this week within the Cabinet, I hope the Chancellor was not merely speaking in a personal capacity."