Sajid Javid said Brexit would impact businesses “one way or the other”
The chancellor has warned manufacturers that “there will not be alignment” with the EU after Brexit and insists firms must “adjust” to new regulations.
Speaking to the Financial Times, Sajid Javid admitted not all businesses would benefit from Brexit.
Last year, the automotive, food and drink and pharmaceutical sectors warned the government that no longer aligning with key EU rules would be damaging.
Mr Javid declined to specify which EU rules he wanted to drop.
Clock to illuminate No 10 as UK leaves the EU
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“There will be an impact on business one way or the other, some will benefit, some won’t,” he told the paper.
He used Japan’s car industry as an example of a manufacturing sector which found success without following EU rules.
Asked how differing regulations between the UK and EU may impact industries such as automotive and pharmaceuticals, he said: “We’re also talking about companies that have known since 2016 that we are leaving the EU.
“Admittedly, they didn’t know the exact terms.”
The government has not yet agreed a future trading relationship with the EU – it plans to do so in the 11-month transition period which begins after the UK leaves the bloc on 31 January.
During the transition period the UK will continue to follow EU rules and contribute to its budget.
‘Here’s the cash, use it’
The chancellor also said he wanted to double the UK’s annual economic growth to between 2.7 and 2.8%.
However, the outgoing governor of the Bank of England, Mark Carney, told the Financial Times last week he thought the UK’s trend growth rate was much lower, at between 1 and 1.5%.
Mr Javid said the extra growth would come from spending on skills and infrastructure in the Midlands and the north of England – even if they did not offer as much “bang for the buck” as projects in other parts of the country.
Historically low interest rates, which allow the government to borrow money relatively cheaply, were “almost a signal to me from the market – from investors – that here’s the cash, use it to do something productive”, Mr Javid said.
He pledged to rewrite Treasury investment rules, which have tended to favour government investment in places with high economic growth and high productivity.
Mr Javid said the rules had helped to “entrench” inequality and insisted weaker parts of the country would have first call on the new money.
How Treasury rules may be rewritten
In November, the Bank of England said a weaker global economy and its new assumptions about Brexit would knock 1% off UK growth over the next three years compared with its previous August forecast.