Chancellor of the Exchequer Sajid Javid has told businesses to prepare for the UK to diverge from EU regulations, saying “we will not be a ruletaker” after the transition period.
“There will not be alignment, we will not be a ruletaker, we will not be in the single market and we will not be in the customs union — and we will do this by the end of the year,” Mr Javid told the Financial Times in an interview published on Friday.
Urging companies to “adjust” to the UK setting its own regulations, the chancellor added: “We’re also talking about companies that have known since 2016 that we are leaving the EU.”
The EU has said that the UK must remained aligned to EU regulations in order to secure a trade deal with the bloc at the end of the transition period in December 2020. However, the British government has maintained that it wishes the country to diverge in order to become more globally competitive and open to international trade deals, which might otherwise be hampered by continuing to abide by Brussels’ rules.
The EU has recently threatened to block the City of London from its financial markets unless it continues with regulatory alignment. However, even Remainers such as former chancellor George Osborne and outgoing Governor of the Bank of England Mark Carney have warned against continued close alignment.
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Mr Osborne had said that “some freedom to be a globalised financial centre would not be a bad thing”, while Mr Carney admitted: “It is not desirable at all to align our approaches, to tie our hands and to outsource regulation and effectively supervision of the world’s leading complex financial system to another jurisdiction.”
During the interview, Mr Javid was asked how the UK will trade with the EU outside of Customs Union rules, with the chancellor observing: “Japan sells cars to the EU but they don’t follow EU rules.”
The Chancellor of the Exchequer’s remarks signal strongly to the EU that the UK is fully ready to end the trade relationship with the bloc without a deal in 11 months’ time and come as reports reveal that Prime Minister Boris Johnson is considering prioritising a trade deal with the United States over the European Union.
A government source said that it would show the EU that the UK is serious about walking away without a deal, unless it is favourable to the UK, saying: “We mean business and we’re not messing around.”
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