PhilipHammond

The UK has begun talks with China over the possibility of a major free trade deal, which would see more export opportunities for British companies and greater inward investment from China, the Chancellor has confirmed.

Speaking to the BBC, Chancellor Philip Hammond said it's time for the UK to consider "new opportunities" ahead of the withdrawal from the European Union.

"What we now need to do is get on with it in a way that minimises the economic impact on the UK economy in the short term and maximises the benefit in the long term," Mr Hammond said.

Earlier this month, media reports in China suggested the government was looking at a free trade deal with the UK.

"The mood music that I have heard here is very much that this will mean more opportunity for countries like China that are outside the European Union to do business with Britain," the Chancellor added.

"And as Britain leaves the European Union and is not bound by the rules of the European Union perhaps it will be easier to do deals with Britain in the future."

Mr Hammond said: "We already have a strategic partnership with China.

"We have hugely increased our trade with China, investment both by British companies into China and by Chinese entities into the UK.

"That's about as far as we can go while we are members of the European Union.

"But once we are out of the European Union then I have no doubt on both sides we will want to cement that relationship into a firmer structure in a bilateral way that's appropriate.

"That's something we will have to explore in the future."

Until the UK leaves the EU, no deal can be agreed. But it is understood the government is looking to New Zealand's deal with China, which took four years to negotiate.

No EU punishment

The Chancellor also stressed that the EU was not making things difficult for the UK following the Brexit vote.

He said: "I don't think they are in punishment mode.

"This is a meeting of finance ministers and central bank governors and, as you would expect, they are very much focused on the economic challenges and the economic prizes available.

"I have no doubt that everyone would want to see a very close relationship between the UK and the EU going forward because that will be good for the economies of the European Union and the economy of the UK.

"The challenge for us is to make sure that other politicians who are not so narrowly focused on the economic agenda also share that view and recognise that it is important not just for Britain but for Europe as well that we continue working closely together."