Treasury officials are ‘determined’ to thwart a clean break from the EU by keeping Britain inside the customs union, it was claimed last night.
Remaining in the customs union is controversial with Brexiteers because it would force Britain to adopt the EU’s external trade tariffs, making it almost impossible to agree bilateral trade deals with other countries.
An extraordinary row broke out after a recording revealed that Tory MPs have been warned that civil servants secretly want to keep the country tied to Brussels.
At a private lunch held at the party’s conference in October, a European Union expert raised the prospect that Britain would not leave the customs union – which allows tariff-free trade between EU countries – because of the resolve of civil servants.
Remaining in the customs union is controversial with Brexiteers because it would force Britain to adopt the EU’s external trade tariffs, making it almost impossible to agree bilateral trade deals with other countries.
In the recording of the event attended by several Tory MPs – including Brexit minister Steve Baker – Charles Grant of the think-tank Centre For European Reform could be heard referring to leaving the single market, which standardises regulations for industries across the EU, but expressing doubt about leaving the customs union. He said: ‘I think it is certain we are going to leave the EU, it is certain we are going to leave the single market, it is not certain we will leave the customs union.
‘The Treasury is determined to stay in the customs union. In private, Treasury officials say we know we are staying in it during the transition [period] and they hope that when we are in the transition people will understand the economic costs of leaving are rather high.
‘There are these unpublished papers sitting in the Treasury showing that the economic cost of leaving the single market and customs union are much greater that the economic benefits of trade agreements with other countries in the world.’
The latest row comes just days after Britain’s top civil servant, Sir Jeremy Heywood, was accused of colluding with chancellor Philip Hammond’s officials to force the Cabinet to accept a watered-down Brexit by leaking economic forecasts that predicted Britain would be worse off outside the EU.
Brexiteers fear there is a concerted push by Remainers in Parliament to keep Britain in the customs union, a policy they claim would lead to what has been dubbed a ‘BRINO’ – Brexit In Name Only.
Former chancellor George Osborne added fuel to the fire yesterday by claiming the latest Whitehall forecasts showed why MPs should seek to water down Theresa May’s Brexit policy.
Former chancellor George Osborne claimed the latest Whitehall forecasts show that MPs should seek to water down the prime minister's Brexit policy
He told BBC Radio 4’s Today programme: ‘We now face a series of choices about the kind of Brexit we want and we have a much clearer idea of the consequences.
‘We should look clearly at the costs and benefits of, for example, leaving the customs union and doing less trade with Europe versus what we might gain from doing a trade deal with America.
‘At the moment the sums don’t stack up for that kind of decision. These are the choices we face, and if we are saying we want out of all of our economic arrangements with our European neighbours then we are embarking on a risky economic course, according to the figures that the Government themselves have produced.’
Meanwhile, on the Prime Minister’s trip to China, International Trade Secretary Liam Fox appeared to cast doubt on whether Britain will definitely leave the customs union after the transition period – expected to last about two years, during which Britain will continue to follow EU rules.
