The chancellor, Sajid Javid, has warned that there will be no alignment with EU regulations once Britain’s exit from the European Union is made official.
In what is being seen as an opening salvo in the next stage of negotiations, he said the Treasury would not lend support to manufacturers that favour EU rules as the sector has had three years to prepare for Britain’s transition.
In an interview with the Financial Times, he said: “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.
“We’re … talking about companies that have known since 2016 that we are leaving the EU.”
His remarks will be seen as confirmation of a strategic departure from Theresa May’s deal in which she envisaged close alignment with the EU, in an effort to reduce friction at the border for traders.
But they will alarm business leaders in key sectors including car manufacturing and agriculture who fear the price of non alignment will be more complex trade barriers to those who export and import with the rest of the EU.
The shadow chancellor, John McDonnell, said Javid’s remarks showed Tory promises were “not worth [the] paper they were written on”. In a tweet, he added: “Fears now made real about food price increases & threats to jobs in motor industry & manufacturing. Right ideology overriding common sense.”
Labour MP David Lammy described it as a “disaster for business”. “It’s catastrophic for workers and the public services which depend on them too. Brexit will hurt most those communities it claimed to help,” he said.
Andrew Sentance, a former member of the Bank of England’s monetary policy conmittee, described Javid and the government’s new position as “more nonsense”, adding: “Of course we need a high degree of alignment with our closest trading partners.”
Javid once said the UK’s best economic place was to remain in the EU and the single market. In May 2016, a month before the referendum he said the only thing guaranteed about leaving the bloc was a decade of “stagnation and doubt”.
“Just like the Bank of England governor, Mark Carney, and IMF head Christine Lagarde, I still believe that Britain is better off in. And that’s all because of the single market.
“It’s a great invention, one that even Lady Thatcher campaigned enthusiastically to create. The world’s largest economic bloc, it gives every business in Britain access to 500 million customers with no barriers, no tariffs and no local legislation to worry about,” he said in an article in the Daily Telegraph.
Last week the European commission president, Ursula von der Leyen, warned that the price of non-alignment would be friction in trade.
“The more divergence there is, the more distant the partnership has to be,” she said.
Michel Barnier, the EU’s chief negotiator has also warned that the UK will not get a tariff-free, quota-free trade deal with the EU unless it accepts level-playing field rules on issues such as the environment.
Javid admitted that some businesses may not benefit from Brexit, but added that the UK economy would ultimately continue to thrive in the long term.
“Once we’ve got this agreement in place with our European friends, we will continue to be one of the most successful economies on Earth,” he said.
But the Food and Drink Federation (FDF) said that no regulatory alignment with the EU after Brexit could lead to price rises.
Its chief operating officer, Tim Rycroft, said the chancellor’s comments represented “the death knell for frictionless trade”.
He told the BBC Today programme on Saturday: “Food and drink manufacturers will be deeply concerned by the chancellor’s suggestion that there will not be regulatory alignment with the EU post-Brexit.
“It will mean businesses will have to adjust to costly new checks, processes and procedures, that will act as a barrier to frictionless trade with the EU and may well result in price rises.”
Javid will have the opportunity to sell his vision for Britain’s economy post-Brexit when he travels to Davos next week for the World Economic Forum.
Negotiations on the future relationship are expected to begin formally after 25 February when the EU has formally agreed its negotiating goals.
It is not clear whether the UK will publish detailed negotiating objectives, which is the convention in trade talks.
Javid was upbeat about the economy, saying he wanted to boost growth rates to between 2.7% and 2.8% a year – the average for 50 years after the second world war.
Last week, Mark Carney, the Bank of England governor, told the FT he thought Britain’s trend growth rate was much lower at between 1% and 1.5% .
