Friday, June 30, 2017

Reuters News - Dollar despairs on hawkish central banks, Asia stocks join global slump

A man (3rd L) looks at an electronic stock quotation board as passers-by walk past, outside a brokerage in Tokyo, Japan January 20, 2016.  REUTERS/Toru Hanai
A man (3rd L) looks at an electronic stock quotation board as passers-by walk past, outside a brokerage in Tokyo, Japan January 20, 2016. REUTERS/Toru Hanai

By Nichola Saminather | SINGAPORE
The dollar extended its losses on Friday as major central banks signalled that the era of cheap money was coming to an end in a boon to sterling, the euro and the Canadian dollar, while Asian shares were hit by dismal performances of European and U.S. markets.
European markets were set to open a little lower, with financial spreadbetter LCG expecting Britain's FTSE 100 .FTSE, Germany's DAX .GDAXI and France's CAC 40 .FCHIto all start the day down 0.1 percent. All three lost between 0.5 percent and 1.9 percent on Thursday.
But global stock market indexes are set for more gains by the end of this year, driven by an economic revival in Europe and bright prospects for much of Asia, a Reuters poll of around 300 financial professionals showed.
The dollar index .DXY fell 0.1 percent to 95.549, poised for a 1.8 percent slide this week, having fallen in all sessions but one. It is down 1.4 percent for the month, and 4.8 percent for the quarter.
The Korean won weakened against the dollar after the country reported industrial production rose by 0.2 percent in May from a month earlier, missing expectations for growth of 1.5 percent. That followed a 2.2 percent decline in April
The dollar was up 0.1 percent at 1,142.5 won KRW=KFTC.
But the greenback remained lower against other major currencies. Adding to the dollar's weakness against the yen was data showing Japanese core consumer prices rose 0.4 percent in May from a year earlier in its fifth straight month of gains, although inflation remains well below the central bank's 2 percent target.
The dollar fell 0.25 percent to 111.95 yen, after losing 0.2 percent on Thursday. It was heading for a 1.2 percent gain for the month, but is down 4.2 percent this year.
Bank of England Governor Mark Carney surprised many on Wednesday by conceding a rate hike was likely to be needed as the economy came closer to running at full capacity.
Sterling GBP=D3 was 0.1 percent higher on Friday at $1.3017, adding to Thursday's 0.6 percent gain.
Two top policymakers at the Bank of Canada also suggested they might tighten monetary policy there as early as July.
The dollar slipped 0.15 percent to C$1.2984 CAD=, extending Thursday's 0.26 percent loss.
Despite comments by sources that European Central Bank President Mario Draghi had intended to signal tolerance for a period of weaker inflation, not an imminent policy tightening, the euro on Friday revisited the 13-month high of $1.1445 hit on Thursday.
The euro EUR=EBS remained close to that level and was at $1.1439 on Friday, retaining most of Thursday's 0.6 percent gain.
"Obviously there's a shift afoot. It really seems that there's some coordinated effort going on out here among the G10 central banks," said Stephen Innes, head of trading in Asia-Pacific for OANDA in Singapore, referring to the series of hawkish-sounding comments on monetary policy.
In stocks, the MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS fell 0.7 percent, after hitting a two-year high on Thursday. It is up 5.3 percent for the quarter and has risen 18.3 percent this year.
The negative sentiment infected Chinese shares despite surveys showing activity in the country's manufacturing and services sector accelerated in June from the previous month. Manufacturers appeared to enjoy strong external demand, as new orders and production rose at a solid pace.
The CSI 300 index .CSI300 fell 0.3 percent, while the Shanghai Composite .SSECslipped 0.1 percent.

Hong Kong's Hang Seng .HSI slid 0.9 percent.
Japan's Nikkei .N225 tumbled 1.2 percent, shrinking its monthly gain to 1.7 percent. It is up 4.5 percent this year.
Overnight, the tech-heavy Nasdaq .IXIC led declines on Wall Street with a 1.4 percent loss. The Nasdaq is poised to post a 0.9 percent loss for the month, but is still up 14 percent this year.
The drop in tech stocks overnight was due to a rotation into bank shares, which have lagged this year, after the biggest U.S. banks revealed buyback and dividend plans that beat analysts' expectations after the Fed approved their capital proposals in its annual stress test program.
The S&P financials index .SPSY rose as much as 2 percent overnight, while the S&P technology index .SPLRCT fell as much as 2.7 percent.
In commodities, oil prices continued their recovery this week on a decline in weekly U.S. crude production.
U.S. crude CLc1 added 0.7 percent to $45.15 a barrel in its seventh straight session of gains, bringing its weekly increase to 5.05 percent, and narrowing its quarterly loss to 10.75 percent.
Global benchmark Brent LCOc1 gained 0.6 percent to $47.67 a barrel, poised to post a 9.8 percent for the quarter.
The dollar's weakness this year has been a boon for gold, which is up 8.25 percent in the same period. It was up 0.1 percent at $1,246.46 an ounce on Friday.
(Reporting by Nichola Saminather; Additional reporting by Masayuki Kitano; Editing by Shri Navaratnam and Christian Schmollinger)

Thursday, June 29, 2017

BBC News - Bank of England takes action over bad loans

Mark Carney
Mark Carney stressed that the UK financial system has strengthened

The Bank of England has forced banks to find a further £11.4bn in the next 18 months to beef up their finances against the risk of bad loans.
Banks will have to set aside £5.7bn in the next six months in case future economic shocks mean some borrowers cannot keep up their repayments.
A further £5.7bn will have to be found by the end of next year.
The Bank's Financial Policy Committee (FPC) suggested lenders had become complacent about their lending.
"Lenders may be placing undue weight on the recent performance of loans in benign conditions," the FPC said.
The committee has also taken action to stop banks getting around key tests which are designed to stop them lending too much to consumers.
The FPC's assessment is that the risks facing the financial system remain at a normal level for now.
But there are "pockets of risk that warrant vigilance" it said, in the Bank's half-yearly Financial Stability Report.
Lenders, the committee said, are relying too heavily on borrowers keeping up payments as well as they have recently, and banks and other lenders have started lending to people with weaker credit records.

'Adverse scenarios'

The FPC highlighted rapidly growing consumer borrowing via credit cards, personal loans and, notably, car finance.
Collectively known as consumer credit, these forms of borrowing have grown by more than 10% in the past year, far outstripping the growth of incomes.
While the amount of borrowing for consumer credit is just a seventh of the size of mortgage lending, the amount lenders have to write off because it is not likely to be repaid is ten times greater than for defaulting mortgage borrowers.
In a news conference, the Bank Governor Mark Carney explained that the Bank was worried about those households who are heavily in debt.
But their borrowing, he said, had not in fact increased the threat to the general resilience of banks.
"We are reinforcing some of the protection [for banks]," he explained, by telling banks to add to their financial cushions.
He declined to blame people for borrowing more, and said that most personal borrowing decisions were reasonable.
However, he advised: "Borrowers should consider adverse scenarios as well as positive scenarios."

Stronger financial system

The Bank is bringing forward by six months a so-called "stress test" in respect of consumer credit, whereby lenders have to test their ability to withstand losses on loans that go bad and are not repaid.
It is also blocking lenders from getting around affordability tests for lenders designed to stop them over-lending on mortgages.
Banks and building societies are currently allowed to lend a maximum of 15% of their mortgages to homebuyers who take especially large loans of more than four and a half times their income.
The lenders have to scrutinise the borrowers to ensure they could still afford their repayments if the Bank of England raised its official base rate by three percentage points.
But some lenders have been assuming they would not in fact pass on all of that increase in higher standard variable rates, thus allowing them to lend slightly more.
Mr Carney said these lenders were not "gaming the system" but instead appeared to have forgotten some of the lessons of the recent past.
Despite these concerns, Mr Carney stressed that the UK financial system was far stronger than at the time of the great banking crash in 2008-09.
He said that since then, UK households had reduced their levels of debt and that it was only in the past 18 months or so that personal lending and borrowing had accelerated again.
"The resilience of the UK financial system has strengthened since the financial crisis," Mr Carney said.

Wednesday, June 28, 2017

BBC News - Next boss Lord Wolfson calls for 'smooth' Brexit

Lord Wolfson
Lord Wolfson says the government needs to "rethink" the Brexit timetable

Lord Wolfson, chief executive of Next, has warned that failing to secure a "smooth" departure from the EU could result in "years of economic decline" for the UK.
The retail boss, who voted in favour of Brexit, said he still believed it would boost trade and the British economy.
But he also warned that it could cause high unemployment if managed badly.
To avoid that, he called for an "orderly transition" when the UK leaves the EU single market and customs union.
"We can't go careering along hell for leather. There is a huge amount of complex work to be done," he wrote in the Mail on Sunday.

Transition period

Brexit Secretary David Davis said on Sunday that a transition of "one to two years" would probably be needed.
"We've discussed with them [the EU] and we think that there will be a transition period," he told BBC One's Andrew Marr Show.
Mr Davis added that he understood the concerns of businesses that leaving the EU without interim arrangements could affect financial stability and customs arrangements.
Lord Wolfson expressed some of those concerns, saying: "The UK government and EU need to rethink the timetable for negotiation and set out options for a realistic transition period."
The Next chief executive, whose clothing and home goods retail chain employs 49,000 staff, said he was in favour of a Brexit that "focused on prosperity and jobs".
He said that would involve "pro-economic" immigration, an open approach to trade, and allowing more than two years to leave the EU.
Meanwhile, the prime minister is set to create a new Brexit council for business leaders, according to reports.
The group will involve business groups and be co-chaired by Mr Davis and Business Secretary Greg Clark, the Sunday Times reported.
Mr Davis told the BBC he was "pretty sure", but not "certain", that he will be able to get a free trade deal with the EU.

Tuesday, June 27, 2017

Bloomberg News - South Africa Treasury Working to Fix Country’s Economic ‘Mess’

South Africa’s new National Treasury Director General, Dondo Mogajane, said the institution is focused on carrying out reforms that will get the economy out of a recession and improve its credit ratings.
“We are in a mess -- the mess is a low growth trap, but it’s possible to get out of it,” Mogajane said at a conference in Johannesburg on Saturday, his first public comments since his appointment on June 8. The economy needs to encourage more competition, generate jobs and keep the cost of living low while focusing on fast and inclusive growth, he said.
Mogajane, an 18-year Treasury veteran, was promoted to replace Lungisa Fuzile, who resigned following the removal of former Finance Minister Pravin Gordhan in a cabinet reshuffle at the end of March. Both Fitch Ratings Ltd. and S&P Global Ratings cut the country’s foreign-currency credit ratings to junk after the shake up, while the South African economy went into a recession in the first quarter and unemployment hit a 14-year high at 27.7 percent.
“There’s no difference in our work since Gordhan left,” Mogajane said. There are 1,200 people in National Treasury who want to do all they can to get South African out of the recession and improve its ratings, he added.
“If our economy doesn’t grow and continues on the downward spiral, we will one day be forced to say we go to the International Monetary Fund or the World Bank with cap in hand,” Mogajane said. “We need to tackle legislative uncertainty. The current management in National Treasury stands ready to change ownership patterns in our economy.”

Monday, June 26, 2017

Reuters News - U.S. top court set to rule on religious rights; travel ban looms

FILE PHOTO: Chief Justice of the United States John Roberts (R) stands with associate Justice Neil Gorsuch during his investiture ceremony at the Supreme Court in Washington, U.S., June 15, 2017.REUTERS/Joshua Roberts/File Photo
The U.S. Supreme Court is set to rule on Monday in a closely watched religious rights case involving limits on public funding for churches and other religious entities as the justices issue the final rulings of their current term.
The nine justices are due to rule in six cases, not including their decision expected in the coming days on whether to take up President Donald Trump's bid to revive his ban on travelers from six predominantly Muslim countries in which an emergency appeal is pending.
Of the remaining cases argued during the court's current term, which began in October, the most eagerly awaited one concerns a Missouri church backed by a conservative Christian legal group. The ruling potentially could narrow the separation of church and state.
A decision in favor of Trinity Lutheran Church, located in Columbia, Missouri, set the stage for more public money to go to religious entities. The church sued after being denied state taxpayer funds for a playground improvement project because of a Missouri constitutional provision barring state funding for religious entities.
Trinity Lutheran could be headed for a lopsided win, with two liberal justices joining their conservative colleagues in signaling support during the April oral argument. It was one of the first in which Trump's conservative appointee to the court, Neil Gorsuch, participated.
The dispute pits two provisions of the U.S. Constitution's First Amendment against each other: the guarantee of the free exercise of religion and the Establishment Clause requiring the separation of church and state.
A broad ruling backing the church could hearten religious conservatives who favor weakening the wall between church and state, including using taxpayer money to pay for children to attend private religious schools rather than public schools. President Donald Trump's education secretary, Betsy DeVos, is a leading supporter of such "school choice" plans.

The most notable of three immigration-related cases in which rulings are due on Monday is a dispute over whether immigrants detained by the U.S. government for more than six months while deportation proceedings unfold should be able to request their release. The case takes on additional significance with Trump ratcheting up immigration enforcement, placing more people in detention awaiting deportation.
The court also is set to decide a case that could clarify the criminal acts for which legal immigrants may be deported. Another involves whether the family of a Mexican teenager shot dead while standing on Mexican soil by a U.S. Border Patrol agent in Texas can sue for civil rights violations.
As the justices look to finish work before their summer break, they must decide what to do with Trump's travel ban, which was blocked by lower courts. His administration has made an emergency request asking for the ban to go into effect while the litigation continues.
The March 6 executive order called for a 90-day ban on travelers from Libya, Iran, Somalia, Sudan, Syria and Yemen and a 120-day ban on all refugees entering the United States to let the government implement stronger vetting. Trump has said the order is needed urgently to prevent terrorism in the United States.
(Reporting by Lawrence Hurley; Editing by Will Dunham)

Friday, June 23, 2017

Reuters News - Under pressure, Western tech firms bow to Russian demands to share cyber secrets

By Joel SchectmanDustin Volz and Jack Stubbs | WASHINGTON/MOSCOW
Western technology companies, including Cisco, IBM and SAP, are acceding to demands by Moscow for access to closely guarded product security secrets, at a time when Russia has been accused of a growing number of cyber attacks on the West, a Reuters investigation has found.
Russian authorities are asking Western tech companies to allow them to review source code for security products such as firewalls, anti-virus applications and software containing encryption before permitting the products to be imported and sold in the country. The requests, which have increased since 2014, are ostensibly done to ensure foreign spy agencies have not hidden any "backdoors" that would allow them to burrow into Russian systems.
But those inspections also provide the Russians an opportunity to find vulnerabilities in the products' source code - instructions that control the basic operations of computer equipment - current and former U.S. officials and security experts said.
While a number of U.S. firms say they are playing ball to preserve their entree to Russia's huge tech market, at least one U.S. firm, Symantec, told Reuters it has stopped cooperating with the source code reviews over security concerns. That halt has not been previously reported.
Symantec said one of the labs inspecting its products was not independent enough from the Russian government.
U.S. officials say they have warned firms about the risks of allowing the Russians to review their products' source code, because of fears it could be used in cyber attacks. But they say they have no legal authority to stop the practice unless the technology has restricted military applications or violates U.S. sanctions.
From their side, companies say they are under pressure to acquiesce to the demands from Russian regulators or risk being shut out of a lucrative market. The companies say they only allow Russia to review their source code in secure facilities that prevent code from being copied or altered. (Graphic on source code review process:
The demands are being made by Russia’s Federal Security Service (FSB), which the U.S. government says took part in the cyber attacks on Hillary Clinton’s 2016 presidential campaign and the 2014 hack of 500 million Yahoo email accounts. The FSB, which has denied involvement in both the election and Yahoo hacks, doubles as a regulator charged with approving the sale of sophisticated technology products in Russia.
The reviews are also conducted by the Federal Service for Technical and Export Control (FSTEC), a Russian defense agency tasked with countering cyber espionage and protecting state secrets. Records published by FSTEC and reviewed by Reuters show that from 1996 to 2013, it conducted source code reviews as part of approvals for 13 technology products from Western companies. In the past three years alone it carried out 28 reviews.
A Kremlin spokesman referred all questions to the FSB. The FSB did not respond to requests for comment. FSTEC said in a statement that its reviews were in line with international practice. The U.S. State Department declined to comment.
Moscow's source code requests have mushroomed in scope since U.S.-Russia relations went into a tailspin following the Russian annexation of Crimea in 2014, according to eight current and former U.S. officials, four company executives, three U.S. trade attorneys and Russian regulatory documents.
In addition to IBM, Cisco and Germany's SAP, Hewlett Packard Enterprise Co and McAfee have also allowed Russia to conduct source code reviews of their products, according to people familiar with the companies' interactions with Moscow and Russian regulatory records.
Until now, little has been known about that regulatory review process outside of the industry. The FSTEC documents and interviews with those involved in the reviews provide a rare window into the tense push-and-pull between technology companies and governments in an era of mounting alarm about hacking.
Roszel Thomsen, an attorney who helps U.S. tech companies navigate Russia import laws, said the firms must balance the dangers of revealing source code to Russian security services against possible lost sales.

"Some companies do refuse," he said. "Others look at the potential market and take the risk."
If tech firms do decline the FSB's source code requests, then approval for their products can be indefinitely delayed or denied outright, U.S. trade attorneys and U.S. officials said. The Russian information technology market is expected to be worth $18.4 billion this year, according to market researcher International Data Corporation (IDC).
Six current and former U.S. officials who have dealt with companies on the issue said they are suspicious about Russia's motives for the expanded reviews.
"It’s something we have a real concern about," said a former senior Commerce Department official who had direct knowledge of the interaction between U.S. companies and Russian officials until he left office this year. "You have to ask yourself what it is they are trying to do, and clearly they are trying to look for information they can use to their advantage to exploit, and that’s obviously a real problem."
However, none of the officials who spoke to Reuters could point to specific examples of hacks or cyber espionage that were made possible by the review process.
Source code requests are not unique to Russia. In the United States, tech companies allow the government to audit source code in limited instances as part of defense contracts and other sensitive government work. China sometimes also requires source code reviews as a condition to import commercial software, U.S. trade attorneys say.

The reviews often takes place in secure facilities known as "clean rooms." Several of the Russian companies that conduct the testing for Western tech companies on behalf of Russian regulators have current or previous links to the Russian military, according to their websites.
Echelon, a Moscow-based technology testing company, is one of several independent FSB-accredited testing centers that Western companies can hire to help obtain FSB approval for their products.
Echelon CEO Alexey Markov told Reuters his engineers review source code in special laboratories, controlled by the companies, where no software data can be altered or transferred.  
Markov said Echelon is a private and independent company but does have a business relationship with Russia’s military and law enforcement authorities.
Echelon’s website touts medals it was awarded in 2013 by Russia’s Ministry of Defense for "protection of state secrets." The company’s website also sometimes refers to Markov as the "Head of Attestation Center of the Ministry of Defense."
In an email, Markov said that title is only intended to convey Echelon’s role as a certified outside tester of military technology testing. The medals were generic and insignificant, he said.
But for Symantec, the lab "didn't meet our bar" for independence, said spokeswoman Kristen Batch.
“In the case of Russia, we decided the protection of our customer base through the deployment of uncompromised security products was more important than pursuing an increase in market share in Russia,” said Batch, who added that the company did not believe Russia had tried to hack into its products.
In 2016, the company decided it would no longer use third parties, including Echelon, that have ties to a foreign state or get most of their revenue from government-mandated security testing.
"It poses a risk to the integrity of our products that we are not willing to accept," she said.
Without the source code approval, Symantec can no longer get approval to sell some of its business-oriented security products in Russia. "As a result, we do minimal business there," she said.
Markov declined to comment on Symantec’s decision, citing a non-disclosure agreement with the company.

Over the past year, HP has used Echelon to allow FSTEC to review source code, according to the agency's records. A company spokesman declined to comment.      
An IBM spokesman confirmed the company allows Russia to review its source code in secure, company-controlled facilities "where strict procedures are followed."
FSTEC certification records showed the Information Security Center, an independent testing company based outside Moscow, has reviewed IBM’s source code on behalf of the agency. The company was founded more than 20 years ago under the auspices of an institute within Russia’s Ministry of Defense, according to its website. The company did not respond to requests for comment.
In a statement, McAfee said the Russia code reviews were conducted  at "certified testing labs" at company-owned premises in the United States.
SAP allows Russia to review and test source code in a secure SAP facility in Germany, according to a person familiar with the process. In a company statement, SAP said the review process assures Russian customers “their SAP software investments are safe and secure.”
Cisco has recently allowed Russia to review source code, according to a person familiar with the matter.
A Cisco spokeswoman declined to comment on the company's interactions with Russian authorities but said the firm does sometimes allow regulators to inspect small parts of its code in "trusted" independent labs and that the reviews do not compromise the security of its products.
Before allowing the reviews, Cisco scrutinizes the code to ensure they are not exposing vulnerabilities that could be used to hack the products, she said.

(Reporting by Joel Schectman and Dustin Volz in Washington and Jack Stubbs in Moscow; Editing by Jonathan Weber and Ross Colvin)

Wednesday, June 21, 2017

BBC News - Philip Hammond on Brexit: Prioritise jobs and living standards

Jobs and living standards must come first as the UK negotiates its exit from the EU, Philip Hammond has said.
The chancellor said it would require "every ounce of skill and diplomacy" to get the right deal, warning that people didn't vote for Brexit to be poorer.
Speaking in London, he said changes to customs arrangements should be phased in and there should be transitional measures to protect key industries.
Labour said the chancellor was seeking to "distance himself" from Theresa May.
Mr Hammond's speech came as ministers deny the UK had caved in over the timetable for Brexit talks.
As the process began on Monday, the EU's chief negotiator Michel Barnier said the two sides had agreed to discuss the details of the UK's exit - such as the rights of citizens and any so-called "divorce bill" - before moving on to the UK's post-Brexit relationship with the EU.
The UK has always maintained that the two issues go hand in hand and should be dealt with simultaneously.
In his first major speech since the Conservatives failed to win a majority in the general election, Mr Hammond set out his priorities for the Brexit negotiations, placing the needs of the UK economy and businesses front and centre.
While the talks had got off to a promising start, he warned they would get "tougher" and the remaining 27 EU members would have their own agenda.
"The future of our economy is inextricably linked to the kind of Brexit deal we reach with the EU over the next 20 months," he told an audience of City leaders at the Mansion House.

By Economics Editor Kamal Ahmed

Philip Hammond said that no-one voted for Brexit to become poorer.
He also made it clear that he wants to put the economy at the heart of the Brexit negotiations. Rather than sovereignty or controlling immigration, which are the issues likely to motivate other colleagues in the Cabinet and certainly in the Conservative Party.
The tensions are clear. The chancellor - strengthened since the general election - gave the greatest detail yet about what his approach might mean for our future relationship with the EU. Yes, as he said at the weekend, the UK will be leaving the customs union.
But he made the case for a new form of customs agreement with "current border arrangements" - which presumably means agreeing to some form of EU oversight for some years following Britain's exit from the union. Read more

He added: "I am confident we can do a Brexit deal which puts jobs and prosperity first, that reassures employers that they will still be able to access the talent they need, that keeps our market for goods, services and capital open, achieves early agreement on transitional arrangements so trade can carry on flowing smoothly.
"The collective sigh of relief would be audible. The benefit to our economy would be huge."
Mr Hammond said every sector of the British economy, whether it be the car industry, pharmaceuticals or financial services, were dependent on a "smooth" transition to a post-Brexit world that was underpinned by a "comprehensive" free trade agreement in goods and services.
A deal "that protects jobs, prosperity and living standards in Britain will require every ounce of skill and diplomacy we can muster", he said, claiming that any alternative outcome would not be "delivering on the instructions" given by the public when they voted Leave in last year's referendum.

Border checks

Mr Hammond said the UK still planned to leave the single market and customs union despite calls for a rethink from business after the inconclusive election result. But he said border checks - particularly in Ireland - must remain as "frictionless as possible" as the UK moved to a different system.
"To do this in the context of our wider objectives will be challenging... It will almost certainly need an implementation period, outside the customs union itself but with current customs border arrangements remaining in place until new long-term arrangements are up and running."
Border between Northern Ireland and the Republic of Ireland
The Irish land border is a major pre-occupation of the Brexit talks
Leaving the EU, he added, could not be to the detriment of investment, enterprise or increased productivity - which he said held the key to the UK's future economic growth and the government's ability to pay for increased funding for public services at a time of growing "weariness" over austerity.
"I thought we had won that argument. But I learnt in the general election that we had not. That we must make anew the case for a market economy and for sound money, the case for growth, we need to explain again how stronger growth must be delivered."
Barry Gardiner, the shadow secretary of state for international trade, said Mr Hammond had "swallowed Labour's playbook" by backing a "jobs-first Brexit, fair and managed migration and no deal being a bad deal".
"He has adopted the very wording," he told the BBC's Daily Politics.
Conservative MP Stephen Hammond told BBC Radio 4's The World at One there was a "changed dynamic" around Brexit since the general election, saying voters accepted the UK was leaving the EU but wanted to ensure the economy was protected.
His fellow Tory MP Iain Duncan Smith, a leading voice in the campaign to leave the EU, said the chancellor's speech was "fine", with little he disagreed with.
He agreed a short period of "interim measures" would be needed.
Speaking earlier on Tuesday, Transport Secretary Chris Grayling denied the UK had effectively conceded to the EU's timetable for talks - which will see discussions on a future trade deal come after those on the terms of exit.
"We've agreed to talk about the rights of EU citizens, which we've been saying all along was a top priority for us; something to deal with right at the start," he told BBC Radio 4's Today.
"We are also talking about the issue of the Irish border; that's a real priority for us. So as far as we're concerned we are dealing with things that are absolutely at the top of our list right now, and that people will expect to be on the top of our list."