Downing Street backs Philip Hammond as he softens stance on Brexit again

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Downing Street backed Philip Hammond today after he pledged that Britain will remain “recognisably European” after Brexit.

The Chancellor also appeared to withdraw a threat to slash taxes and regulation to compete against the European Union if the UK was refused a favourable trade deal.

Downing Street responded: “While Brexit presents opportunities to build a more global Britain, we’ve always been clear we’re leaving the EU but not leaving Europe.”

Mr Hammond’s comments to a French newspaper irritated Tory Brexiters, who saw it as another move by the Treasury to soften the departure from the European Union. Economist Gerard Lyons, an ally of Boris Johnson, said the UK should aim for “a British model” in its future taxes and regulations.

Jeremy Hunt, the Health Secretary, weighed in alongside Mr Hammond, insisting the Government was united behind “very positive messages to Brussels” about its post-Brexit vision.

Mr Hunt also said that the NHS would be free “to recruit doctors and nurses from all over Europe” after Brexit.

Downing Street sources played down Mr Hammond’s remarks, denying they were a change in tone. However, they were widely seen as a complete contrast to comments he made to a German newspaper in January which were interpreted as threatening to undercut the EU with a Singapore-style economic model of low tax and regulation.

Speaking to Le Monde, he said: “I often hear it said that the UK is considering participating in unfair competition in regulation and tax. That is neither our plan nor our vision for the future.

“The amount of tax we raise as a percentage of our GDP puts us right in the middle of the pack. We don’t want that to change, even after we’ve left the EU. I would expect us to remain a country with a social, economic and cultural model that is recognisably European.”

In January, however, he urged a trade deal, and warned:  “But if we are forced to be something different, then we will have to become something different.”

A Treasury source said his weekend interview reflected growing confidence of a favourable trade deal. The source said that his January comments had been over-interpreted as a threat.

Labour’s divisions on Brexit remained apparent as shadow Brexit secretary Emily Thornberry told an interviewer that the party would not say what model it wanted. She told Westminster Hour that Labour “wasn’t sweeping any options off the table” when it came to negotiating Brexit.

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