Hammond and Davis Said to Seek Common Brexit Plan as Feud Abates

(Bloomberg) -- Chancellor of the Exchequer Philip Hammond and Brexit Secretary David Davis are setting aside their ideological differences in an effort to work out a common strategy for leaving the European Union as the British government's deadline to trigger Article 50 draws nearer, according to government officials.

With Prime Minister Theresa May yet to make it clear what kind of exit from the bloc she favors, the ministers agree that the government needs to settle on a plan urgently, said the officials, who asked not to be named because the talks are private.

Hammond, who campaigned against Brexit, and Davis, who's fought EU membership for more than 20 years, are meeting frequently to work out how far Britain should insist on immigration controls and whether the country should still contribute to the EU budget, the officials said. Hammond has already persuaded Davis of the need to protect the interests of U.K.-based banks, according to one of the officials.

The rapprochement emerged over the past month after May ordered her Cabinet to unite behind planning for Brexit amid signs of splits. Evidence of the shift first became apparent when Davis told Parliament on Oct. 20 that he is “determined to get the best possible deal” for London as a financial center. Until then, Hammond had been virtually the only minister making the case for the City.

As the two of the most senior ministers after May, any agreement between Hammond and Davis is likely to shape the government's broader approach to the Brexit negotiations and may also shift perceptions of Hammond's influence within the cabinet. The chancellor has appeared isolated at times because of his public support for maintaining the closest possible ties with the EU.

In speeches since taking office, Davis indicated a preference for cracking down on immigration even if that cost membership of the single market, while Hammond echoed bankers in repeatedly arguing for a need to preserve access to the bloc and ensure high-skilled foreigners will still be able to work in the U.K.

Court Setback

May on Thursday pledged to stick to her timetable of starting Brexit negotiations in March after a court ruled that she needs Parliament's permission to trigger the talks. The legal decision -- which the government will appeal -- injects further uncertainty into an already opaque process and could require the prime minister to dilute her plans in order to win the backing of lawmakers.

Opposition members of Parliament said they would use any vote to press for greater insight. The pound -- the worst-performing major currency of 2016 -- rose to a four-week high against the dollar after the ruling, even though lawmakers didn't call into question the decision to quit the EU.

The decision to challenge the court's decision rather than immediately call a vote in Parliament has fueled doubts about whether May can meet her pledge to start exit talks by the end of March and added to the pressure on Hammond and Davis to reach a settlement, the officials said. Both are now hopeful that a compromise position can be found to avoid excessive curbs on skilled workers, the officials said.

To contact the reporter on this story: Svenja O'Donnell in London at sodonnell@bloomberg.net.

To contact the editors responsible for this story: Alan Crawford at acrawford6@bloomberg.net, Ben Sills, Nick Rigillo