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Philip Hammond.
The Chancellor of the Exchequer told newspaper Welt am Sontag, Britain would have to change its economic model if shut off from the European market. He hinted the country could slash taxes for companies in an effort to remain competitive, essentially turning itself into a tax haven.
Reporting on Hammond's plans, French newspaper Le Monde and Germany's Der Spiegel referred to the comments as "blackmail" and "threats." German politicians were also irritated.
"The two major economic weaknesses in Great Britain are the considerable trade deficit and the large budget deficit. Hammond's tax cuts "threats" are therefore threats of self-harm and as such an expression of British helplessness," Christian Democratic Union deputy Norbert Röttgen told German newspaper Welt.
He added: "Instead of threats, which exist on both sides, considering the international threats, everyone should focus on the common interests and the compromises derived from them. Even after the Brexit, we should strive for a partnership as close as possible in the interest of the EU and the
German MEP Alexander Graf Lambsdorff also dismissed Hammond's comments: "Hammond apparently wants to impress Brussels with a horror scenario at the beginning of the negotiation process. We should ignore this. Instead of blustering, it would be more sensible for Britain to finally put a coherent overall concept on the agenda for the future of the relationship."
"Hammond apparently wants to impress Brussels with a horror scenario at the beginning of the negotiation process. We should ignore this. Instead of blustering, it would be more sensible for Britain to finally put a coherent overall concept on the agenda for the future of the relationship."
To others, Hammond's announcement was simply a surprise. "Even after the Brexit, Britain will continue to be a member of the OECD and the G7, and there are clear principles for the taxation of companies. I do not have the impression that London wants to leave all international organisations," MEP Markus Ferbers said.
Hammond told Welt am Sontag that if the UK has no access to the European market post-Brexit, that "we could be forced to change our economic model and we will have to change our model to regain competitiveness. And you can be sure we will do whatever we have to do. The British people are not going to lie down and say, too bad, we've been wounded. We will change our model, and we will come back, and we will be competitively engaged."
Britain has previously dangled the threat of becoming a tax haven in the past, but Hammond's comments carry more weight this time considering that British Prime Minister Theresa May is expected to reiterate on Tuesday that she wants a "Hard Brexit," which means Britain will opt out of freedom of movement.
This would, in turn, lead the UK to be shut off from the single market as key European politicians have made clear that the UK would not be allowed to "cherry-pick" which European freedoms it wants to keep.