Chancellor Hammond proposes a transitional period for Brexit

The two years stipulated for Brexit negotiation that will bring a formal end to the UK’s membership to the EU may be a mirage as a result of some delicate issues which may not be exhaustively discussed and agreed upon within a space of two years.

Thus, Chancellor Philip Hammond has suggested a transitional arrangement to be put in place in order to help both parties to guard against a sudden “cliff edge” change in trade agreement in the European continent.

Speaking to MPs, the Chancellor stated that "emerging view" among businesses, regulators and some politicians that the two-year timeframe after Article 50 is triggered may not be long enough to reach a "clear and firm end state".

Thus, while presenting evidence at the Treasury Select Committee, he suggested the importance of a transitional deal which may be necessary to prevent a sudden "cliff edge" change in trade arrangements which could cause financial instability both in the UK and across the continent.

Speaking further Hammond said "Having a longer period to manage the adjustment between where we are now as full members of the European Union and where we get to in the future as a result of the negotiations that we will be conducting would be generally helpful, would tend towards a smoother transition and would run less risks of disruption."

Article 50 is the formal process for leaving the EU, and Theresa May has promised to invoke it by the end of March 2017 - sparking a strict two-year countdown for the UK to negotiate a settlement with the trading bloc.

The business sector and the City in particular have expressed concern about what would happen if this deadline was missed, especially if the UK also quits the single market.

Mr Hammond's remarks trail a leaked memo that suggested Brexit Secretary David Davis was "not really interested" in a transitional deal.

Though a  spokesman for the Department for Exiting the EU insisted the document did not "properly reflect" his views or Government policy, and added that Mr Davis was "looking at all options" to deliver a smooth and orderly departure from the European Union.

Stephen Kinnock, a Labour MP who supports the Open Britain group campaigning for a "soft Brexit" deal, described the Chancellor's acknowledgment that a transitional deal may be required as "encouraging".

He added: "There is a growing consensus that agreeing a new trading relationship between Britain and Europe may take much longer than the two years specified by Article 50.

"Not signing a transitional arrangement would mean punishing tariffs which would hit British businesses and raise prices in the shops."