UK will reject any EU offer of a 'blind Brexit', says Philip Hammond

Chancellor says a vague long-term agreement – avoiding outright rejection of the Chequers proposals – would not be acceptable

Philip Hammond says the UK will reject what has been dubbed a “blind Brexit”, which the EU increasingly sees as the only possible way to strike a withdrawal deal.

The Chancellor said the compromise – avoiding outright rejection of the Chequers proposals, by agreeing only a vague outline of a future trading relationship – would not be acceptable.

Asked, for example, if the UK would settle for a deal stating the two sides would merely “work towards some sort of common rule book”, he insisted firm agreement on such a key plank of Theresa May’s Brexit plan was needed.

“No, I think on something as central to the proposition we will need to spell out what it means,” Mr Hammond told a House of Lords committee.

The Chancellor also admitted he had no idea what Michel Barnier meant when the EU’s Brexit negotiator said an agreement was possible by November if the UK was “realistic” in its aims.

“I think I can confidently predict it will mean different things to different people,” Mr Hammond said. “Clearly that will be an issue for the negotiations over the next few weeks.”

The pound rose sharply on Monday, after Mr Barnier said he wanted an agreement “within six or eight weeks” – even though he added the caveat “if we are realistic”.

The Independent revealed at the weekend that the EU will try to strike a deal through an ambiguous text on a long-term relationship in return for softer language on avoiding a hard border in Ireland.

It has been dubbed a “blind Brexit” because the UK would be leaving the EU with no certainty about its future trading terms, beyond the 21-month transition period.

Speaking to the peers, Mr Hammond said: “Clearly we don’t have enough time to negotiate the full draft legal text in what will be quite a complex future partnership agreement.”

But he warned there had to be “enough detail in it for us to be able to clearly understand where we have agreed to go and for parliament to be able to take a view on the package as a whole”.

The “common rule book” is a key element of the Chequers plan, helping to solve the Irish problem by enabling “frictionless trade at the border” – although it triggered the resignations of David Davis and Boris Johnson.

In his evidence, Mr Hammond also:

* Warned of the risk of “turbulence” after Brexit – which prompted the decision to extend the term of Mark Carney, the Bank of England governor.

* Ridiculed Brexiteer forecasts for a no-deal departure as “frankly not plausible” and “wildly out of line with the assumptions made by other economic models”.

* Defended his forecast of a 7.7 per cent hit to GDP from crashing out of the EU without a deal – arguing it had been drawn up by a “cross-government professional team”, drawing on five other departments.

* Agreed the EU might refuse to negotiate with the UK if it refused to pay any of the £39bn “divorce bill” and sent the controversy to “complex and time-consuming arbitration” instead.

* Said he was unable to announce the date of the autumn Budget, because an emergency EU summit on Brexit in November might intervene.