October 19, 2016 / 1:45 PM / in a year

HIGHLIGHTS-UK finance minister Hammond speaks in parliament

LONDON, Oct 19 (Reuters) - Finance minister Philip Hammond was speaking to lawmakers from the lower house of parliament on Wednesday.

Below is a selection of his comments

KEEPING OPTIONS ON THE TABLE

“Those that are undermining the effort are those that are seeking to close down that negotiating space, seeking to arrive at hard decisions that we don’t need to make at this stage. Keeping as many options open as possible is the key to the strongest possible negotiating hand.”

SINGLE MARKET

“The key issue is whether we have free access to our goods and services for our companies to operate in and trade with the European single market.”

LINK BETWEEN SINGLE MARKET AND MIGRATION

“The central trade-off would be around the European Union’s negotiating position, and it is their clearly stated negotiating position, that access for goods and services to the market is linked inextricably, in the view of their opening position, to freedom of movement. Now we can choose to ignore that, we can seek to move them away from it, but the fact is that the European Union has been pretty clear and pretty consistent in setting that out as their opening stance.”

UNCERTAINTY

“You’re quite right to identify the fact that uncertainty is the big challenge in the next phase of this process. It’s a challenge to our economy, there will be a period inevitably of uncertainty until we know the outcome of the negotiations. There will then follow a different period of structural adjustment, where we have certainty and we have to change the way our economy works to respond to that certainty.”

FINANCIAL SERVICES AS A PRIORITY

“The industry knows that we regard it as extremely important, the industry knows that we understand that it has a particular set of challenges as we go into this period of negotiation with the European Union. And I hope the industry knows, it certainly should know, that helping to address these challenges and taking account of these challenges will be a very high priority for the government.”

PASSPORTING FOR FINANCIAL SERVICES FIRMS

“Passporting is of course important, and the retention of passporting would mean that the problem went away as far as almost all financial services businesses were concerned. And of course from the point of view of the financial services sector that would be the ideal outcome, but in the discussions I’ve had with the financial services sector, and I’ve spent a lot of time with companies here, European and U.S. providers, I think they are also realistic and are looking at other options beyond passporting to protect their interests.”

PRIME MINISTER MAY‘S CRITICISMS OF THE SIDE-EFFECTS OF LOW INTEREST RATES

“My understanding is that what the prime minister was trying to say is that we recognise that monetary policy, which is an important tool of macroeconomic policy, has a distributional impact and to the extent that the government believes that distributional impact needs to be addressed or corrected, we also have tools available to do that.”

“Monetary policy is independently determined, that will continue to be the case. The Monetary Policy Committee will continue to make decisions on interest rates and recommendations on unconventional monetary policy.”

WILL BRITAIN STAY IN CUSTOMS UNION

“We haven’t made any decision on that yet.”

HOW QUICKLY TRADE DEALS COULD BE STRUCK

“It’s become the convention to believe that it takes years to negotiate trade deals, and certainly there have been some very long drawn-out multilateral trade deals. I think there is a reasonable argument ... that negotiating a straightforward bilateral trade deal ought to be a great deal simpler than negotiating a trade deal between a third country and a bloc of 28 countries.”

GILT YIELDS

“It’s not for me to second-guess the market but if you read market commentary, part of it is a global phenomenon. Gilt yields have risen, Bunds, Treasuries have risen at the same time, but UK gilts have risen differentially, that’s certainly true, and the conventional wisdom would be that’s a reflection of the falling value in sterling.”

NO SPENDING “SPLURGE”

“My own interaction with market players suggests they’re relaxed about that (dropping fiscal rule for budget surplus in 2019/2020) so long as we’re clear that our intention is to come back to a point of fiscal balance, and that what we do in the meantime will be proportionate, measured and responsible. It’s not some kind of splurge and I promise you that it won’t be some kind of splurge.”

MONETARY POLICY EFFECTS

“An easier monetary policy in this country over the past six years has also delivered us 2.7 million jobs and there will be a lot of people out there today who may not own assets, but do have a job that they may not otherwise have had.”

“You have to look at the impact an active monetary policy has delivered in the round, benefits it’s delivered to the economy in the round.”

PRAGMATISM IN NEGOTIATION

“There’s been quite a lot of position taking, as one would expect at this stage in the negotiation, but I remain optimistic that there are at very senior level across the European Union some deeply pragmatic people who have shown by their actions time and again that they can find solutions when challenged with problems.” (Reporting by Helen Reid, compiled by William Schomberg and Andy Bruce)

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