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Philip Hammond urges business leaders in Davos to trust the government to avoid no-deal Brexit

“I need you to take this nonsense off the table and now.”

Business leaders are starting to worry that what they considered to be unthinkable may actually happen: that Britain may leave the European Union in nine weeks’ time, without a deal - and they are starting to communicate their anxiety to ministers in direct terms, off-the-record, at least.

Philip Hammond, Greg Clark and Liam Fox came face to face with the chief executives and chairmen of a large number of British businesses in Davos this lunchtime.

Among them HSBC, Lloyds, WPP, BT, Google, Centrica and Barclays. Most businesses believe a disorderly Brexit would be pretty disastrous either for their companies or for the British economy or both.

They have one eye on the clock and another on the chaos in Westminster and they are urgently seeking reassurance that the government knows what it’s doing.

The Chancellor aimed to calm business leaders' fears in Davos. Credit: AP

The Chancellor tried to offer some words of comfort.

“Politics doesn’t work like business” he told them in a speech at the Belvedere Hotel.

Mr Hammond said he understood that businesses might be feeling “baffled and frustrated” but they needed to understand that the government had to “get the politics and the economics right”.

He added that not leaving the EU “would be a betrayal of the referendum” but so too would leaving without a deal because it would “undermine Britain’s future prosperity”.

The only way to avoid no deal, Mr Hammond said, is for parliament to agree to the prime minister’s deal. The only credible way forward is a “negotiated settlement” with the EU.

“We have to find a way around the impasse around the Irish backstop”.

Trust us, was the message. Mr Hammond indicated that the EU will compromise on the very issue it insists isn’t up for renegotiation.

The Dutch PM reaffirmed there will be no movement on the backstop. Credit: AP

Earlier today the Dutch prime minister told me that here was no room for manoeuvre on the issue of the Irish backstop.

“If there was a time limit, if the UK could unilaterally stop it, that would mean a hard border,” Mark Rutte said. ”We don’t want a return to The Troubles.”

Irresistible force, immoveable object. Someone has to give ground, the cliff edge is looming and the jitters are beginning to show.

The one thing businesses wanted Mr Hammond to say, he didn’t. No-deal remains a possibility.

“I think it’s a bit of brinkmanship to have (no-deal) on the table, we should be very clear that it’s not a desirable solution,” said Johannes Huth from the private equity firm KKR.

Is no deal avoidable? “I don’t know,” said Iain Conn of Centrica, glumly. “We’ll have to wait and see.“

Some politicians insist that, if all else fails, Britain can leave the EU in March, begin trading on WTO terms and thrive. “I think they are smoking illegal substances, personally,” said John McFarlane, the Chairman of Barclays.

“We have a lot of respect for the Chancellor but what worries us is when senior ministers or politicians stand up and try to pretend that no deal is a viable option for the British economy or suggest that it’s only a little bit of turbulence,” said John Neill of Unipart - a supplier to the car industry.

“People who say that are living in a fact-free, fantasy world.”

The government believes it need the threat of a disruptive Brexit to focus minds in Westminster and Brussels.

The CBI isn’t so sure. “It’s situation critical” said Carolyn Fairbairn, the CBI’s director general.

“I think that it is all about what you prioritise, I think (the tactic) is questionable. Nobody wants no-deal and the other side doesn’t want it either, so why don’t we have a kind of realism on this, one about what is achievable and say that (no-deal) is something that should be taken off the table”.

Within the last week, P&O and Sony have decided to reduce their presence in Britain.

Today, Airbus said it was a “disgrace” that businesses still can’t plan for Brexit and warned unambiguously that thousands of jobs will be lost in Britain in the event of no deal.

Ford has confirmed such an outcome would “severely impact” its operation in the UK - that border disruption and a further slump in the value of the pound could cost the company $800 million in 2019.

No one I have spoken to here in Davos seems genuinely persuaded that Theresa May will lead Britain out of the EU in March without agreement but there’s nagging doubt that no-deal might happen.

And it’s growing.

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