Brexit will make workers across the UK poorer, the Governor of the Bank of England has warned.
Just a day after official exit talks began in Brussels, Mark Carney made a direct link between the vote to leave the European Union and weaker income growth.
The Chancellor Philip Hammond also warned that the UK wold be worse off when it leaves the EU in 2019 as he launched his strongest attack yet on the Prime Minister’s planned ‘hard Brexit’, in which immigration is prioritised over the economy.
Mr Hammond said that putting jobs and prosperity first was the only way to claw the UK out of years of austerity.
The warnings add to increasing pressure on Theresa May to change course after she lost her Commons majority in the General Election.
The Tory leader had asked voters to give her a mandate for her Brexit plans at the ballot box.
But the wounded Prime Minister is also facing calls from Brexiters within in her cabinet to stick to her guns.
Barry Gardiner, the shadow international trade secretary, claimed that Mr Hammond had “swallowed entirely the Labour playbook”.
But former Conservative leader Iain Duncan Smith attempted to play down reports of a split within the government on Brexit, saying that there was “not much to disagree with” in Mr Hammond’s speech.
In it the Chancellor called for a trade agreement with the EU, a transitional deal after the 2019 deadline for the end of talks, and a commitment to keep borders open.
Mr Hammond also signalled the UK would seek to maintain the "frictionless" border arrangements of the European Union's customs union for an "implementation period" after leaving the bloc.
Britain will "almost certainly" need a period "with current customs border arrangements remaining in place", he added.
Significantly, he also said that immigration to the UK would be managed but not "shut down" under a "jobs first" Brexit.
At the weekend he described the Tory manifesto commitment to cut net migration to below 100,000 as an aspiration and said that there was no timetable to achieve the target.
In a speech to City leaders at the Mansion House in London, he added that Britain would leave the EU "in a way that prioritises British jobs and underpins Britain's prosperity".
Mr Hammond also noted that workers "did not vote to become poorer", but warned that the future of the UK economy was "inexorably linked to the kind of Brexit deal that we reach with the EU".
He said that businesses across the UK had put investment decisions on hold since the referendum.
After a jobs first Brexit deal "the collective sigh of relief will be audible," he said.
In his speech, Mr Carney said that Brexit had already led the markets to downgrade the UK’s economic prospects.
Mark Carney also called for interest rate levels to remain at a record low, amid fears over the cost of leaving the EU.
He also appeared to mock the Foreign Secretary Boris Johnson’s claim that Britain would be able to “have its cake and eat it” after Brexit.
Mr Carney noted that before long "we will all begin to find out the extent to which Brexit is a gentle stroll along a smooth path to a land of cake and consumption".
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