Brexit talks: Calls for business-friendly free-trade deal –

Brexit talks: Calls for business-friendly free-trade deal –

Secretary to meet European Commission chief negotiator Michel Barnier on Monday, to start formal negotiations under the Article 50 process.

The crucial talks are starting against the backdrop of a UK economic slowdown with latest figures showing inflation rising at a faster rate than wages, squeezing incomes in real terms.

There are also believed to be tensions between and , with the latter said to favour a softer Brexit.

However, a large majority of Britons still support leaving the , with a YouGov poll showing that 70 per cent think the Government should abide by the referendum result.

Dr Gerard Lyons, chief economic strategist at Netwealth Investments and co-founder of Economists for Brexit, said tensions between May and Hammond need to be quickly resolved: “The sooner it is clear that the UK team is in agreement, the better.”

Lyons called for a comprehensive free-trade agreement with the EU that protects workers’ rights and regulations: “I would like to see us leave the single market and customs union, with a bespoke deal in the national interest.”

Time is short with talks due to end in March 2019, and he said a transitional period may be needed to soften any economic shock: “Most businesses would be keen on that.”

Lyons said the EU has an incentive to strike a mutually beneficial deal as it also faces a number of problems, including youth unemployment, immigration and the Greek debt crisis: “I am optimistic that the talks will begin in an amicable way.”

James Warren, a forecaster at the National Institute of Economic and Social Research, said the biggest problem firms face is uncertainty over the outcome: “This makes them less keen to invest, which is a drag on GDP.”

He called on the Government to give clear guidance on how Brexit talks are progressing. “The more transparent the Government is, the more reassured businesses will feel.”

Inflation is a growing threat and last week the Bank of England’s monetary policy committee shocked markets as three out of the eight members voted for an interest rate hike.

Nick Dixon, investment director at Aegon, said the UK economy is highly reliant on consumer spending and the Bank is keen to keep a lid on inflation: “Progress in Brexit talks could give it some breathing room to raise interest rates later in the year.”

Guy Stephens, technical investment director at Rowan Dartington, said it is wrong to blame all of the UK’s problems on Brexit: “Global factors such as the US economy determine global markets and we should not become self-obsessed with our own challenges.”

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