Hammond acknowledges impact of Brexit 'uncertainty'
Uncertainty about the UK's future direction after Brexit is having an impact on economic forecasts, Philip Hammond acknowledged.
The Chancellor said he hoped to see "real progress" in the negotiations with Brussels in the coming months to give certainty to businesses.
Mr Hammond, who was in Brussels for a summit of European finance ministers, said there was a "degree of uncertainty about our future direction".
On Monday the International Monetary Fund slashed the UK's growth outlook from 1.6% to 1.5% for 2019, the year it quits the European Union.
Mr Hammond said: "Because of the negotiations that are going on there's a degree of uncertainty about our future direction and our future arrangements for trading with our European partners and that's bound to have an impact on thinking about the economy.
"The sooner we can generate certainty, the better, and that's why we are keen to build on the momentum that we generated in December and get the negotiations moving forward now in a steady way so that we can see real progress over the course of the coming months."
Mr Hammond's comments came as influential MEPs suggested Britain is heading for a Norway-style relationship with the European Union during a post-Brexit transition period.
In an intervention which could raise concerns among Tory Brexiteers, members of the European Parliament's Brexit steering group said Theresa May must strike a deal that resembles the Scandinavian country's single market membership to get the "implementation period" she desires.
Belgian MEP Philippe Lamberts told The Independent: "During the transition period, the UK will be a member in all but name, but it will no longer sit at the two tables where decisions are made; parliament and council.
"It has to be a Norwegian-style deal, it cannot be anything else and this has been agreed in principle."
He added: "I heard no-one disputing this from the UK's side."
Elmar Brok, who also sits on the group, said: "We are on the way to making the official proposal, it will outline that it should be like a Norway deal.
"This is the position of all three institutions (of the EU)."
A deal based on Norway's membership of the European Economic Area (EEA) would entail continued free movement of people and payments to Brussels.
The Prime Minister has already agreed in principle to pay between £35 billion and £39 billion in a Brexit "divorce bill" and acknowledged in her Florence speech in September that during the transition "people will continue to be able to come and live and work in the UK", although they will need to register with the authorities.
But Jacob Rees-Mogg, the new chairman of the influential European Research Group of around 100 Tory MPs, has demanded that Mrs May ends free movement and takes Britain out of the single market the moment the UK formally quits on March 29 next year.
Meanwhile, there was dismay that the City of London has been "kept in the dark" about the Government's plans to get a Brexit deal for financial services, seen by many as crucial for the economy.
Commons Treasury Committee chair Nicky Morgan said: "The failure to publish a position paper on financial services sends all the wrong signals."
Catherine McGuinness, policy chair at the City of London Corporation, told the FT: "It has always been our expectation there would be a position paper. When so many other sectors and issues have been given this clarity, the City is left in the dark."
The Chancellor said he will use his trip to the World Economic Forum in Davos this week to attempt to secure London's status as a global centre for financial services after Brexit.
"We are keen to discuss with partners, both European and further afield about our future relationships and Britain's role in the global economy and, in particular, London's role in the global financial economy," he said.
Elsewhere, former chancellor Lord Lawson of Blaby said civil servants would try and "frustrate" Brexit, because "the idea that any bureaucrat could be in favour of radical change is a nonsense".
He told BBC Newsnight: "The officials will do their best to frustrate this process because it goes against the grain so fundamentally. But they equally realise their constitutional duty to accept the leadership of the politicians, of the elected government."
But Cabinet Secretary Sir Jeremy Heywood told the programme: "The civil service is putting enormous effort and many of its very best people into making a success of the project."