According to a forecast from the Bank of England, business investment was 20% lower than it expected before the referendum, Mr Hammond warned.

Speaking during a session of the Treasury Select Committee, he told MPs: “It is pretty clear to me that the principle reason is uncertainty created by the continuing of working out how we are going to exit from the EU.

“Where businesses are able to defer investment decisions until they are clearer about the future, many of them are deciding to do so. And we know that anecdotally both from our own engagement with businesses and from reports from Bank of England agents.”

Mr Hammond, who has repeatedly angered Tory Brexiteers with warnings about the economic impact of the referendum result, said businesses had welcomed the Government’s decision to seek another extension to the Article 50 process in a bid to avoid a no-deal Brexit.

“In all engagements I’ve had with business without exception, they believe the extension of Article 50 was a lot better outcome than the potential alternative,” he said.

“But of course, business shares the view I have expressed that the sooner we can bring this to a conclusion the better so that investment can resume and people can get on with the day job as it were.” [...]

His comments come as talks between Labour and the Government to find a compromise solution remain deadlocked, with the Prime Minister accusing the opposition of dragging their feet in negotiations.

But in a message to MPs, Mr Hammond added: “The sooner we can bring that process to an end the better, both for the state of our politics and for investment in our economy.”

BANK OF ENGLAND

Meanwhile, Mr Hammond this morning kick-started the process to find a replacement for Bank of England Govenor Mark Carney, who is set to depart from the role in January 2020 after almost 7 years in the post.

Mr Carney had initially intended to remain as Governor for five years, but twice extended his term due to the continued uncertainty from Brexit. [...]