UK not in position to start Brexit negotiations, says Philip Hammond
Britain is not yet in a position to start negotiations on its exit from the European Union, Foreign Secretary Philip Hammond has said.
Following the June 23 vote in favour of Brexit, London has come under pressure from the EU institutions to kick off the process of negotiating its departure under Article 50 of the Lisbon Treaty.
But Mr Hammond told the House of Commons Foreign Affairs Committee that invoking Article 50 would set the clock ticking on a two-year deadline for the UK to quit, and it would be "unwise" to do so until the Government had decided on its negotiating position and was prepared to fight its corner.
The Foreign Secretary defended the Government's decision to make no contingency plans for a Brexit vote, beyond measures to calm nerves in the financial markets in the immediate aftermath of the result.
Committee chairman Crispin Blunt said it was a "serious oversight" for the Government to leave the country uncertain for months after the referendum about what its future would be after Brexit.
Mr Hammond said he was "not sure I see the need" for contingency plans, as the new European policy would be for the next prime minister to decide after his or her election in September. Any pre-referendum planning by the civil service would have been denounced by the Leave camp as an "unwarranted intervention" in the campaign, he said.
The Foreign Secretary said: "It will be for the new prime minister to decide how best to engage with the European Union and to express to the European Union our views as a government about how we should move forward. This is an untested process. Nobody has ever done this before.
"In terms of triggering Article 50, my judgment is it wouldn't be in the best interests of the UK to trigger Article 50 immediately.
"Article 50 sets a clock ticking and I don't think at the moment, for various reasons - not least of which, we don't have the new prime minister in post - for the moment we are not in a position to begin substantive negotiations immediately and therefore it would be unwise to start the process ticking by triggering Article 50."
Mr Hammond defended the Government's refusal to guarantee long-term rights for EU citizens currently in the UK to remain, telling the committee a "unilateral" decision would undermine Britain's position in negotiations.
"I would not recommend a unilateral commitment by the British Government before we have received any reassurance of a reciprocal approach to UK nationals in other EU countries," he said.
Mr Blunt told the Foreign Secretary his position was "wholly misconceived" and called on ministers to give immediate assurances to EU nationals resident in the UK. Conservative committee member John Baron said Mr Hammond seemed to be driven by a "Project Fear in denial" attitude which prevented any optimistic view of Britain's future.
Mr Hammond said he would be ready to hold informal talks with the EU about the status of expatriates, but the European institutions had insisted that no discussions could take place until Brussels is formally notified of the intention to leave under Article 50.
"It's Brussels that has said until Article 50 is served, we can't start discussions," he said.
"If the bureaucrats in Brussels would say today we are happy to sit down and talk to the UK Government about a deal that assures the mutual rights of citizens in each other's countries, I'm sure the UK would be happy to engage in this process."
Mr Hammond said national governments in the other 27 EU member states had more understanding than the Brussels institutions of Britain's desire to delay the start of talks.
"It's easy for an official in Brussels to say on June 24, 'You've made a decision, so serve the Article 50 notice'. My political colleagues are much more sympathetic to the political circumstances we are in and understand why we don't want to proceed immediately to that."
He suggested that Britain's future diplomatic relations with Europe may rely more heavily on embassies in the 27 national capitals, rather than with Brussels, and that this will require more manpower and resources.
But he dismissed as "wildly unrealistic" Mr Blunt's suggestion that the Foreign Office's budget should be doubled or trebled to deal with the additional workload.
Mr Hammond said he expected Britain to seek a "close alignment" with the EU on common defence and security policies even after its withdrawal.
Even though the UK would not be as influential on EU policy from outside the bloc, he said he hoped it would continue to have some influence in these areas.
He also said it was possible that countries currently undertaking "tortuous" negotiations with the EU on trade agreements may find that deals can be sealed more quickly and easily with Britain on its own.
President Barack Obama famously said during the referendum campaign that the UK would be "at the back of the queue" for a free trade deal with the US if it left the EU.
But Mr Hammond told the committee that some potential trading partners "may find it easier, if less fruitful in the long run, to make a bilateral agreement with the UK".
He explained: " One would expect it would be simpler to negotiate where, on our side of the table, we only need to take into account the interests of one country."
However, he cautioned that if Britain wanted to maintain access to the European single market post-Brexit, it might have to accept some constraints on its ability to negotiate trade agreements with countries elsewhere in the world.
International Monetary Fund managing director Christine Lagarde called on the UK to act quickly to end uncertainty about its future relations with Europe, warning that lengthy delay may not be geopolitically "sustainable".
Ms Lagarde told the Financial Times: "We want to see clarity sooner rather than later because we think that a lack of clarity feeds uncertainty, which itself undermines investment appetites and decision making."
The IMF has forecast that if the UK strikes a Norway-style deal to maintain access to the single market, its economy will be 1.5% smaller by 2019 than it would have been inside the EU. Without such a deal, the hit to growth could be 4.5%.
But Ms Lagarde said that no modelling had been done of the possible impact if Brexit negotiations drag on, telling the FT: "Do we have a forecast and scenario with prolonged uncertainty, total lack of clarity, no triggering of Article 50, things staying in limbo for a long period of time? No. We don't have that. We doubt that it would be sustainable politically, geopolitically."