Philip Hammond says Brexit will cast a two-year 'shadow' over the world economy

Chancellor says uncertainty will continue till Britain leaves the EU but their options are still 'wide'

Caroline Mortimer@cjmortimer
Monday 25 July 2016 16:56
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This was Philip Hammond's first meeting with financial leaders as Chancellor
This was Philip Hammond's first meeting with financial leaders as Chancellor

Philip Hammond has said Brexit will “cast a shadow” over the world economy for at least two years in an interview following the G20 summit in Beijing.

The Chancellor said the turmoil in the markets and signs that the economy is struggling following the vote to leave the European Union in last month’s referendum were to be expected.

In the interview with Sky News he said: “It was a shock to the economic system, it was not something markets or businesses were expecting so obviously there was going to be a reaction or a response to that.

“And because there will now be a fairly lengthy negotiating period there is going to be uncertainty about the outcome hanging over the world economic outlook for the next few years”.

He said Brexit was “one of many shadows” hanging over the global economy which the world’s economic leaders needed to deal with.

( Ng Han Guan-Pool/Getty Images)

Mr Hammond also refused to rule out the prospect of joining the Trans-Pacific Partnership (TPP) - which non-Pacific countries could theoretically join in some capacity subject to member countries’ approval - or a bilateral trade with the Chinese which is rumoured to have been discussed at the meeting.

The TPP deal was signed in secret last year between 12 Pacific countries, including the US, with many fearing it could led to increased drug costs, decreased food safety and job losses as free trade means employers may be able to move production overseas.

Mr Hammond said: “Our options are very wide at the moment, we know that we can’t legally enter into any new trade agreements until the point when he exit the European Union which could be two, two and a half years down the line.

“We’ve got time to look at the options and to negotiate agreements”.

Whatever happens, we will need “to engage with the rest of the world even more strongly”, he said.

The meeting of the world’s top 20 economies in China was dominated by talk about the fallout of Brexit which has caused chaos on the international markets.

The 20 finance ministers, including Mr Hammond, pledged to try to boost economic growth and confront protectionism in the wake of the vote.

In a joint communique sent by the financial leaders, they said: “Members of the G20 are well positioned to proactively address the potential economic and financial consequences stemming from the UK referendum. In the future, we hope to see t

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