* Brexit has hit UK economy - finance minister
* Mood in Brussels is to do a deal with UK
* Hammond seeks to build bridges with business
* Britons will have to pay more tax to fund health (Recasts after TV interviews)
By William James
BIRMINGHAM, England, Oct 1 (Reuters) - British finance minister Philip Hammond said on Monday the United Kingdom had the fiscal capacity to cope with leaving the European Union without any agreement but believed the mood in Brussels was to reach a divorce deal.
Britain's exit from the European Union next March has increased uncertainty for employers, with talks about the future relationship between the world's fifth largest economy and its largest trading partner becoming increasingly fraught.
"I'm clear that we will have the fiscal capacity to support the British economy if we were unfortunately to find ourselves in a no-deal situation," he told Sky News.
However, Hammond said the doubts about the future had already hit the economy and the next few weeks would be crucial in securing an agreement with the EU.
"The mood is undoubtedly that people want to do a deal with the UK. People want to minimise the disruption of the UK's departure from the European Union, they want to continue having a relationship with us and smooth trading partnership in the future," he told BBC TV.
"Clearly there has been a hit to the economy through the uncertainty the Brexit process has caused. Many businesses are sitting on their hands frankly waiting to see what the outcome of this negotiation is before confirming their investment plans."
Reassuring businesses they remain at the heart of the centre-right Conservatives Party's plan for the economy will be the focus of Hammond's speech to his party's conference on Monday.
The business community has expressed frustration over the government's lack of clarity during the Brexit process and what some see as a decision to put ideology before the economy.
"We back business, as the cornerstone of a successful economy, as a force for good in our society, and as an essential expression of our values," Hammond will say in his speech to the Conservative Party's annual conference in Birmingham.
The British Chambers of Commerce said it wanted the Conservatives to overcome their internal divisions and "to deliver real-world, practical answers to business’s ongoing questions around Brexit – and avoid a messy and disorderly exit from the EU."
FOUL LANGUAGE
Relations suffered earlier this year when then-foreign minister Boris Johnson was quoted dismissing business leaders' concerns about Brexit, using foul language, in a meeting with EU diplomats.