Philip Hammond refuses to rule out second Brexit referendum

Philip Hammond refused to rule out the possibility of a second Brexit referendum, but added he was "optimistic" a deal could be struck with Labour to break parliament's deadlock.

Speaking at meeting of finance ministers in Bucharest, the Chancellor said the government had "no red lines" during its Brexit discussions with Labour.

Hammond said: "We are expecting to exchange some more text with the Labour Party today, so this is an ongoing process and I'm optimistic that we will reach some form of agreement later."

The Chancellor added he wanted to Brexit talks to succeed and that the right deal should be struck for the benefit of Britain.

He added: “We should try to complete this process in Parliament, that’s the right way to do it. But we should be open to listen to suggestions that others have made.

“Some people in the Labour Party are making other suggestions to us, of course we have to be prepared to discuss them.

“Our approach to these discussions with Labour is that we have no red lines, we will go into these talks with an open mind and discuss everything with them in a constructive fashion.”

Labour leader Jeremy Corbyn said he had not noticed "any great change" in Theresa May's position.

Speaking to reporters while campaigning in Plymouth, Mr Corbyn said: "The Labour position is a customs union with the European Union, access to European markets and the retention of regulations for environment, consumers, and workplace rights as a base on which we can build - a dynamic relationship which means we can never fall below them.

"We've set all that out. I haven't noticed any great change in the Government's position so far. I'm waiting to see the red lines move."

Talks between Labour and the Conservatives appeared to be at breaking point on Friday after shadow Brexit secretary Sir Keir Starmer said the government was not willing to move on certain issues.

Shadow Home Secretary Diane Abbott said: "We are engaged in these talks in good faith but the Government perhaps has to show a little more flexibility than it seems to have done so far.”

Labour’s position was that it wanted a customs union, single market alignment, protection of rights and “some kind of People’s Vote”.

Pressed on whether any agreement must have a second referendum attached to it, she told Today: “We are not saying anything definitively but we have a position.”

Diane Abbott said Labour was committed to engaging in talks with the Tories 'in good faith' . Credit: PA

While it “has to be part of the negotiations”, Ms Abbott said “we have not gone into these talks being dogmatic”.

She added: “I think a People’s Vote has its difficulties. I think if we had that vote tomorrow, I believe Leave would win.”

It comes after Theresa May asked the European Union for another extension to delay the UK's exit from the EU until June 30.

European Council president Donald Tusk is recommending a longer postponement of one year, with a break clause in the case of earlier ratification, in a so-called “flextension” deal.

But Conservative minister Nadhim Zawahi warned May that their party faced an "existential threat" if the UK were to be in the EU at the time of European Elections next month.

“We need to do that quickly because, I think, going into the EU elections for the Conservative Party, or indeed for the Labour Party, and telling our constituents why we haven’t been able to deliver Brexit, I think would be an existential threat,” he told BBC Radio 4’s Today programme.

Theresa May has already asked the EU for one Brexit extension. Credit: PA

An extension is not automatic and requires the agreement of all 27 other EU countries, with France one of those most cautious about agreeing to it.

French Europe Minister Amelie de Montchalin said an extension would require the UK to put forward a proposal with “clear and credible political backing” and “in the absence of such a plan, we would have to acknowledge that the UK chose to leave the EU in a disorderly manner”.

Mrs May has already obtained one extension to the Article 50 withdrawal process, postponing the date of Brexit from March 29 to April 12.

Mr Hammond acknowledged the frustration with the British among the 27 other EU members.

“I understand that EU colleagues are somewhat fed up that the process has taken as long as it has; we are also fed up that we haven’t been able to complete this earlier, but I am very confident that we will get it done.”