Brexit: UK will not cut taxes, says Philip Hammond
The UK will not cut tax and regulations after Brexit in a bid to undercut EU rivals, Philip Hammond has suggested.
The chancellor told French newspaper Le Monde that tax raised as a percentage of the British economy "puts us right in the middle" of European countries.
"We don't want that to change, even after we've left the EU," he added.
It has been viewed as a softer tone from Mr Hammond, who in January said the UK would do "whatever we have to do" post-Brexit to stay competitive.
But Labour said Mr Hammond was "in open dispute" with himself.
BBC political correspondent Chris Mason says that having lost their majority at this year's general election, the Conservatives would struggle to persuade the Commons to support slashing taxes and regulation.
In his latest interview, Mr Hammond told Le Monde: "I often hear it said that the UK is considering participating in unfair competition in regulation and tax.
"That is neither our plan nor our vision for the future.
"I would expect us to remain a country with a social, economic and cultural model that is recognisably European."
Our correspondent said those words "appeared to be at odds with some of his own comments earlier this year".
During an interview in January, Mr Hammond was asked by Welt am Sonntag whether the UK could become a tax haven after leaving the EU.
He said he was "optimistic" about securing a good trade deal with the EU but if this did not happen "you can be sure we will do whatever we have to do".
"If we have no access to the European market, if we are closed off, if Britain were to leave the European Union without an agreement on market access, then we could suffer from economic damage at least in the short-term," he said at the time.
"In this case, we could be forced to change our economic model and we will have to change our model to regain competitiveness."
Labour said Mr Hammond was now contradicting what he had said at the start of the year.
"The truth is that the British people will not believe the fake U-turn of a Tory chancellor in a French newspaper, while he is still going ahead with billions of pounds in corporation tax giveaways in this parliament, and refuses to rule out further cuts," said shadow minister Peter Dowd.
In his latest interview, Mr Hammond also said the UK wanted EU workers be part of the British economy and carry on with their family life in the country, and the same for British expats working in Europe.
He said the bill for Brexit was not a question about money, but how the UK leaves the EU without causing problems for businesses and people.
Breaking up the City of London would benefit New York not Frankfurt or Paris, he added.