The Chancellor has moved to assure business leaders there will be “no cliff edges” as Britain moves closer to activating Article 50.
During a trip to Davos, Switzerland, home of World Economic Forum, Mr Hammond said he wanted to help ease Britain into its new future.
Speaking to Bloomberg, he said: “What the Prime Minister talked about on Tuesday is the need to move forward quickly after we’ve served the notice to scope out what the end state is going to look like.
Philip Hammond hinted Britain may opted for a post-Brexit transitional deal
No cliff edges, no sudden change for business, plenty of time to adjust
He continued: “We need to get an agreement, a practical solution for the end state for the relationship between Britain and the rest of the European Union – but recognising that will then take some time to implement.”
Talk of a transitional deal is likely to rile those on the Leave side of the debate who may see it as a betrayal of the referendum result.
Eurosceptics warn any arrangement that would take negotiations past the two-year deadline may lead to Brexit being permanently derailed.
Philip Hammond and Theresa May are currently in Davos, Switzerland
But, Mr Hammond said any such transitional deal would buy the Government important time to hammer out a comprehensive trade agreement.
“Until we get into the detailed talks we can’t say how much time,” he continued.
”We need to be pragmatic about this, there will systems to put in place, businesses will take time to make the transition.
“The clear message we’re giving, and I think this works for Britain and Europe, no cliff edges, no sudden change for business, plenty of time to adjust.”
Theresa May spoke to leaders at the World Economic Forum on Thursday
The Chancellor travelled to Davos alongside Theresa May where the pair told an audience at the World Economic Forum that Britain was “open for business”.
Speaking to business leaders and politician, the prime minister said the UK will be a “world leader” on trade.
She warned a post-Brexit trade deal with the EU would be difficult and warned nations of the need to tackle the backlash against globalisation, liberalism and free trade.
Theresa May's 12 point Brexit plan
Mon, January 16, 2017
It's finally here!
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Continued cooperation with the EU to tackle terrorism and international crime.
Mrs May said: "Talk of greater globalisation can make people fearful. For many it means their jobs outsourced and their wages undercut. It means having to sit back as they watch their communities change around them.
"And in their minds, it means watching as those who prosper seem to play by a different set of rules, while for many life remains a struggle as they get buy, but don't necessarily get on."
The Conservative leader promised the UK would take on a “leadership role as the strongest and most forceful advocate for free markets” across the world post-Brexit.