Chancellor Phillip Hammond has said that Britain’s economic model could change should the country be locked out of the single market.
Interviewed by the German Welt am Sonntag Newspaper, Hammond said that he was “optimistic” on the chances of striking a reciprocal deal on single market access. He was also asked if Britain would turn into a tax haven.
He said he hoped the UK would “remain in the mainstream of European economic and social thinking.
“But if we are forced to be something different, then we will have to become something different.”.
“If we have no access to the European market, if we are closed off, if Britain were to leave the European Union without an agreement on market access, then we could suffer from economic damage at least in the short-term.
“In this case, we could be forced to change our economic model and we will have to change our model to regain competitiveness. And you can be sure we will do whatever we have to do.
“The British people are not going to lie down and say, too bad, we’ve been wounded. We will change our model, and we will come back, and we will be competitively engaged.”
Criticised by Corbyn
This has not gone down well with Labour leader Jeremy Corbyn who said on the Andrew Marr show, “He appears to be making a sort of threat to EU community saying ‘well, if you don’t give us exactly what we want, we are going to become this sort of strange entity on shore of Europe where there’ll be very low levels of corporate taxation, and designed to undermine the effectiveness or otherwise of industry across Europe.’
“It seems to me a recipe for some kind of trade war with Europe in the future. That really isn’t a very sensible way forward.”
Mr Corbyn also said Mrs May “appears to be heading us in the direction of a sort of bargain basement economy on the shores of Europe where we have low levels of corporate taxation. It seems to me an extremely risky strategy.”
Theresa May is said to be giving a significant speech on Tuesday, setting out more detail on the government’s Brexit strategy.