Britain's Chancellor of the Exchequer Philip Hammond listens as Prime Minister Theresa May gives a speech. Picture: REUTERS
Britain's Chancellor of the Exchequer Philip Hammond listens as Prime Minister Theresa May gives a speech. Picture: REUTERS

London — British Chancellor of the Exchequer Philip Hammond said on Wednesday the value of a transitional Brexit deal would decline rapidly if talks dragged into next year, but said it was too soon to spend money on contingency plans.

Negotiations on the terms of Britain’s exit from the EU have made slow progress before a March 2019 deadline. Talks on a transition period have not even yet begun.

And, while Hammond thinks it is too early to begin enacting contingency plans for a failure to reach an agreement, EU diplomats and officials are putting renewed focus on preparing for a legal limbo after March 2019.

Their efforts have intensified as Brexit negotiations stall on issues such as the bill Britain must pay to leave and the future of Northern Ireland’s land border with the EU. If progress does not pick up, Hammond said, a transition agreement would diminish rapidly in value.

"It is self-evident to me … that a transitional arrangement is a wasting asset. It has a value today. It will still have a very high value at Christmas, early in the new year," Hammond said.

"But as we move through 2018, its value to everybody will diminish significantly. And I think our European partners need to think very carefully about the need for speed in order to protect the potential value to all of us of having an interim period."

UK Prime Minister Theresa May has set out plans to seek a transition period after March 2019 with a set time limit. During that period, Britain wants to operate under the same rules as it currently does to provide certainty for businesses, while allowing new arrangements to be put in place.

Reuters

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