Treasury boss admits Brexit risks

Pro Brexit demonstrators hold banners outside Parliament in London. Photo / AP

The British Government has announced plans for special events on the night of January 31 when the country officially leaves the European Union but the treasury chief has admitted some UK business sectors will suffer as a result.

Sajid Javid told the Financial Times that Britain's regulations will not be aligned with the EU in the future and that those changes may hurt some businesses. The EU is Britain's largest trading partner.

"There will not be alignment, we will not be a rule-taker, we will not be in the single market and we will not be in the Customs union — and we will do this by the end of the year," he said, referring to a deadline at the end of 2020 for conclusion of what are expected to be contentious trade talks with the then-27 member EU.

Javid's comments sparked fresh concerns among business leaders worried about that lack of clarity on the substance of the trade rules that would take effect in less than 12 months.

Food and Drink Federation chief Tim Rycroft warned that diverging from EU rules could lead to higher food prices for consumers.

"It will mean businesses will have to adjust to costly new checks, processes and procedures, that will act as a barrier to friction-less trade with the EU and may well result in price rises," he said.

The Society of Motor Manufacturers and Traders has emphasised the need to avoid high tariffs and other trade barriers once EU ties are severed.

Chief executive Mike Hawes said "billions" would be added to the cost of business development unless a mutually beneficial agreement is reached.

Britain will officially leave the EU bloc on January 31 but will keep following EU rules for an 11-month transition period. It will be the first nation to leave the bloc. The British government plans to mark the occasion with a series of upbeat events.

Prime Minister Boris Johnson, who is seeking a trade deal with the US, has ruled out seeking an extension of the deadline for the EU talks.

- AP