Britain to negotiate '˜temporary' customs union post-Brexit

The proposal is understood to be one of several options put forward by the Department for Exiting the EU ahead of the third round of formal negotiations with Brussels later this month.

The Prime Minister and her fellow Cabinet members have repeatedly stated their commitment to secure “friction-free trade” with the union after Brexit, claiming that Britain’s future trade policy will be “more outward-looking than ever before”.

However, clashes between senior minsters over a possible transitional arrangement with the trading bloc and continued membership of the single market have led to accusations that the Government’s position lacks clarity.

The Chancellor Philip Hammond and International Trade Secretary Liam Fox were said to have put on a show of unity at the weekend after writing a joint letter stressing that the UK will leave both the customs union and single market in March 2019.

The statement follows a public disagreement over the point at which Britain’s membership of these two trading arrangements should come to an end, and how long any transition to a new trade relationship could last.

The row only added to rumours of a growing rift between Brexiteer ministers and those who are pro-Remain. It was also accompanied by criticisms from the EU’s chief negotiator, Michel Barnier, who claimed the UK needs to provide further “clarification” on issues such as its financial obligations before Brexit talks can progress.

Officials in Brussels have made it clear that it is unwilling to begin negotiating a new trade relationship with the UK until an agreement is reached on the future rights of EU nationals, and the border between Northern Ireland and the Republic.

However, ministers will set out their ambitions for a new customs arrangement with the EU in a position paper today, including details of an ‘interim” period which could include a “temporary customs union”.

“This time-limited period of implementation will provide certainty for businesses in the UK and the EU and would ensure that businesses only have to adjust once to a new customs relationship,” a spokesman said.

“During this interim period, which will be negotiated with Brussels, Britain will look to negotiate bold new trade relationships around the world.”

The Government will also set out its solutions to avoid a hard border between Northern Ireland and Ireland. The Irish premier Leo Varadkar has stressed he does not want to see an “economic barrier” between the two nations, while Theresa May has pledged there will be “no return to the borders of the past”.

However, it is widely expected that the Government will stick with plans to use smart technology and spot checks to monitor the flow of goods between the two countries after 2019. The Irish foreign minister Simon Coveney is said to have expressed concerns about this approach.

The position papers come as a campaign by Labour supporters to get the party to commit to the continuation of free movement gains momentum, with members drawing up a motion to debate at party conference in the autumn.

The pro-Brexit campaign group Leave.EU has also ramped up its efforts to encourage voters to de-select Philip Hammond and Amber Rudd, with chairman Arron Banks, accusing them of “meddling” in the Brexit process.