Chancellor says government will seek ‘modest’ changes from EU, while Jacob Rees-Mogg says ministers are ‘cowed’

Theresa May has bowed to pressure from Eurosceptic MPs and disowned remarks by the chancellor, Philip Hammond, as she struggled to quell a fresh Tory revolt over Brexit that could threaten her leadership.

Hammond enraged leave MPs in his own party on Thursday by telling business leaders in the Swiss ski resort of Davos that the government would seek only “modest” changes in its relationship with the European Union.

“Instead of doing what we’re normally doing in the trade negotiations – taking two divergent economies with low levels of trade and trying to bring them closer together to enhance that trade, we are taking two completely interconnected and aligned economies with high levels of trade between them, and selectively moving them, hopefully very modestly, apart,” Hammond said.

After pro-Brexit MPs in Westminster reacted furiously, and some ministers privately made their disquiet known to Downing Street, No 10 moved to distance the prime minister from her chancellor’s remarks.

A source said: “Whilst we want a deep and special economic partnership with the EU after we leave, these could not be described as very modest changes.”

The fresh cabinet rift followed Boris Johnson’s open disagreement over NHS funding earlier this week and came at a fragile moment for the prime minister’s leadership as a string of Conservative MPs told the Guardian some of their colleagues were considering another attempt at ousting her if the local elections in May go badly.

Former minister Andrew Percy was one of the first Tories to criticise Hammond publicly, saying he should “put a sock in it” and stop “mocking other cabinet ministers by writing his own Brexit policy”.

Owen Paterson, a Conservative MP and former cabinet minister, tweeted a warning directly to Hammond and David Davis, the Brexit secretary, that they should remember that the party’s manifesto got 13.7m votes: on a platform of leaving the single market and customs union.

Arguing that ministers should have been in Davos trumpeting the benefits of Brexit, he told the Guardian: “It would be good if all cabinet ministers stuck to government policy.”



Hammond sought to clarify his comments on Twitter. He wrote: “I said in Davos that gov wants to minimise any reduction in access to EU market post Brexit. And it’s a fact our economies are integrated, that’s the baseline from which we leave the single market and customs union – which clearly represents change.

“For anyone concerned – I was clear earlier in same speech at Davos UK will cease to be member of EU on 29 March 2019, and after we will be outside customs union and the single market.”

Some pro-EU Tory MPs were disturbed by May’s willingness to cave in to pro-Brexit backbenchers. One said: “Hammond was spot on and the prime minister should be supporting her chancellor not giving in to an unrepresentative ideologically driven minority.”

Meanwhile, Eurosceptic backbencher Jacob Rees-Mogg used a speech in Hampshire on Thursday to accuse the government of being “cowed” by Brussels in the Brexit talks.

“For too long our negotiators seemed to have been cowed by the EU. Their approach seems to be that we must accept what the EU will allow us to do and build from there. This is no way to negotiate and it is no way for this country to behave,” he said.



Rees-Mogg chairs the powerful European Research Group (ERG) of pro-Brexit Tory MPs, who are threatening to vote as a bloc against the government in the upcoming customs bill to prevent the government retaining the power to keep the UK in a customs union with the EU.

He warned May and her cabinet colleagues against allowing Brexit to become “only a damage limitation exercise”. He argued: “The British people did not vote for that. They did not vote for the management of decline. They voted for hope and opportunity and politicians must now deliver it.”

His strident tone followed a clash with Davis at the House of Commons Brexit committee on Wednesday. It underlines the fact that Eurosceptic MPs have become increasingly concerned about the government’s direction and are determined to press their point home publicly.

In particular, Rees-Mogg, who drew large crowds at last year’s party conference and topped a recent poll of Conservative members for who should be party’s next leader, stressed that Britain must leave the customs union: an issue on which Brexiters fear there has been backsliding inside government.

“The negotiations that are about to begin sound as if they aim to keep us in a similar system to the single market and the customs union,” Rees-Mogg said. “‘Close alignment’ means, de facto, the single market; it would make the UK a rule taker like Norway, divested of even the limited influence we currently have.”

Jacob Rees-Mogg to lead influential group of Tory Eurosceptic MPs Read more

Iain Duncan Smith, the former Conservative leader, told the BBC he was “puzzled” at the chancellor’s intervention and that, while he hadn’t seen the Rees-Mogg speech, “from what I’ve heard I think he is much closer to where the government was at the time of the election and needs to be as we go through”.

Rees-Mogg was elected as the new chair of the ERG after the previous incumbent, Suella Fernandes, was given a government post in this month’s reshuffle.

The highly organised group of vocal backbench MPs are in restive mood, after May’s reshuffle earlier this month disappointed expectations that Steve Baker, its former chair who became a Department for Exiting the European Union minister, would be allowed to attend cabinet.

The Labour MP Stephen Doughty of pro-EU campaign group Open Britain, said: “Theresa May is losing control of the Brexit process. Not only has she completely alienated pro-Europeans, she now has Brexit extremists on her own backbenches like Jacob Rees-Mogg, as well as members of her own cabinet, growing increasingly undisciplined.”

Rees-Mogg’s speech comes as Davis prepares to set out his hopes for a transition deal in a speech in Middlesbrough on Friday.

The government hopes to conclude talks on a transition deal by the end of March; and has accepted that the European court of justice will continue to have jurisdiction during the transition, which is expected to last around two years.

Davis will stress that Britain plans to begin negotiating new trade deals during the transition period. “As an independent country, no longer a member of the European Union, the United Kingdom will once again have its own trading policy.

“For the first time in more than 40 years, we will be able to step out and sign new trade deals with old friends, and new allies around the globe.” But Rees-Mogg told Davis on Wednesday that obeying EU laws without having a judge on the ECJ would make Britain a “vassal state”.