Chancellor Philip Hammond has warned the UK will not be able to leave the EU in just two years without posing a serious risk to a number of areas including financial stability.
The Chancellor is calling for a transitional deal to help ensure a "smooth" Brexit, with "less risks of disruption" just a week after Michael Barnier, the EU's chief negotiator for Brexit, said a deal should be reached by October 2018.
The Treasury Select Committee defines transitional arrangements as "any arrangement that takes effect between the point at which the UK formally leaves the EU...and the point at which the UK's final settled relationship with the EU becomes effective".
Hammond (pictured) told the Treasury on Monday there was an "emerging view" that having a longer interim between these points would ensure a "smoother transition".
But he told MPs this suggestion was not purely based on the effects on the UK's financial services.
He said: "For example, depending on what future customs arrangements are between the UK and European Union, there could be significant physical infrastructure changes that need to be made at ports of entry and exit, not only in the UK but on continental Europe as well.
"It is not just the business sector, it is also the government sector that has to think about how long it takes to make changes, hire people, train people, introduce IT changes.
"I think the further we go into this discussion, the more likely it is that we will mutually conclude that we need a longer period to deliver," he added.
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