Philip Hammond says UK should stick to EU customs rules for period after Brexit – Politics live

This is what Philip Hammond, the chancellor, said in his speech about how Britain would have to abide by EU customs union rules for a period after Brexit.

So, how do we achieve this “Brexit for Britain”? …

By agreeing frictionless customs arrangements to facilitate trade across our borders – and crucially – to keep the land border on the island of Ireland open and free-flowing.

To do this in the context of our wider objectives will be challenging.

It will almost certainly involve the deployment of new technology.

And therefore we’ll almost certainly need an implementation period, outside the customs union itself, but with current customs border arrangements remaining in place, until new long-term arrangements are up and running.

The pound has fallen to a one-week low against the US dollar, as Mark Carney declares it is too early to raise interest rates.

The Bank of England governor is telling the Mansion House audience that the UK economy isn’t strong enough to handle higher interest rates, especially as we don’t know how the Brexit talks will proceed.

This sent the pound sharply lower, to $1.2674:

Carney explains that he doesn’t agree with the three members of the Monetary Policy Committee (MPC) who voted to hike borrowing costs last week (they were outvoted by the other five members, including Carney).

Here’s the relevant section from Mark Carney’s speech:

Different members of the MPC will understandably have different views about the outlook and therefore on the potential timing of any Bank Rate increase. But all expect that any changes would be limited in scope and gradual in pace.

From my perspective, given the mixed signals on consumer spending and business investment, and given the still subdued domestic inflationary pressures, in particular anaemic wage growth, now is not yet the time to begin that adjustment.

In the coming months, I would like to see the extent to which weaker consumption growth is offset by other components of demand, whether wages begin to firm, and more generally, how the economy reacts to the prospect of tighter financial conditions and the reality of Brexit negotiations.

Here’s the moment that traders saw those quotes:

My colleague Graeme Wearden has more on his business live blog.

This is what Carney said about Brexit.

Since the prospect of Brexit emerged, financial markets, notably sterling, have marked down the UK’s economic prospects.

Monetary policy cannot prevent the weaker real income growth likely to accompany the transition to new trading arrangements with the EU. But it can influence how this hit to incomes is distributed between job losses and price rises. And it can support households and businesses as they adjust to such profound change. Indeed, in such exceptional circumstances, the MPC is required to balance any trade-off between the speed with which it returns inflation sustainably to the target and the support that monetary policy provides to jobs and activity.

That is why last summer the Bank announced a series of monetary and macro-financial measures to support the economy during this transition. This stimulus is working. Credit is widely available, the cost of borrowing is near record lows, the economy has outperformed expectations, and unemployment has reached a 40 year low.

Mark Carney, the governor of the Bank of England, starts by referring to the recent terrorist attacks, and to the murder of Jo Cox last year. We must respond by building a Brexit that works for all.

He turns to Brexit, and warns that people face weaker real income growth. It is not time for an interest rate rise, he says.

Hammond asks how Britain can achieve a Brexit that works for the people.

He identifies four priorities.

First, it must get a comprehensive agreement on trade and services.

Second, there must be mutually beneficial transitional arrangement, avoiding disruption and dangerous cliff edges.

Third, there must be frictionless customs arrangements.

This will involve an implementation period, when the UK will be outside the customs union, but customs rules will remain in place pending the new rules coming into force.

• Hammond says the UK expects to abide by customs union rules for an “implementation period” after Brexit.

He says the new system will also involve investment in technology.

And, fourth, there must be arrangements in place to protect the City, he says.

Philip Hammond, the chancellor, has just started giving his Mansion House speech. He was due to give it last week, but it was cancelled after the Grenfell Tower fire.

Instead he is now, unusually, giving it in the morning.

He started by talking about the fire, and saying that the survivors must get everything they need.

And he said the government must get to the bottom of what caused it.

He then spoke about the state of the economy, saying it was in good shape.

Now he is turning to the future.